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Cable & ISPs Lead VoIP Market Development

Voice over Internet Protocol (VoIP) telephone services, which last year counted less than 38 million subscribers worldwide, should have a subscriber base of over 267 million in 2012, according to a new study released by ABI Research.

"Hosted service providers, the pioneers of commercial VoIP, are going to grow to some extent, but it will be cable operators and other broadband providers trying to leverage their high speed data networks who will really push VoIP in the future," says principal broadband analyst Michael Arden. These operators want to add value to their broadband pipes, and they will generate new revenues over and above what they earn from their basic net access services.

While traditional telcos have been slow to embrace VoIP due to their huge investment in conventional telephone networks, their desire for total control of service quality and their fear of upsetting their existing customer relationships, the development of VoIP markets will play out differently in the world's major regions.

"In the U.S. market," says Arden, "it's driven by competition: cable operators are offering VoIP, hoping to take some customers away from the telephone companies. Eventually the cable operators will start offering converged services, and to compete, the telcos will have to go to VoIP as well."

"In Europe, though, many telecom operators are currently upgrading and implementing Ethernet networks for increased operational efficiencies. As an example, BT is doing this on a huge scale right now. European telcos are taking VoIP into consideration and making it part of their network upgrade. Meanwhile in Japan, the drive isn't coming from the telecom operators or even from the cable operators, it's really the third-party broadband players such as SoftBank."

Consumers' decisions to switch to VoIP telephony are at present based largely on its lower cost and the offer of simplified billing, but Arden sees those reasons as temporary. By around the end of the decade, he believes, the driving motivation will be how VoIP telephony is converged with video, online gaming and other services.

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