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Europeans Have Meaningful Telecom Options

According to In-Stat's latest in-depth assessment, the U.S. and European telecom markets are diverging at a rapid pace.

In Europe, regulatory policies force incumbent operators to manage their network infrastructure separately from their retail services. Next-generation network facilities, even fiber-to-the-home connections, are available to all competitors on an equal basis. The result is thriving competition in most consumer market segments.

In 2006, European incumbent operators lost a combined 10 million fixed-line subscribers. During the year, over 14 million consumer households converted to VoIP, with the incumbent operators adding nearly 3 million VoIP subscribers. This is what substantive innovation can do, and it's what real competition does to change the status quo -- more choice, and lower prices.

Across Europe there is a growing sense of urgency, in terms of building next-generation networks, introducing new services and winning the customer's preference. The urgency is exemplified by the recently negotiated settlement between Deutsche Telekom and union workers that calls for a 6 percent pay cut, and a longer work week.

In contrast, the U.S. consumer telecom market lacks significant competition. Competitive service providers do not have access to the incumbent's next-generation network infrastructure. The former RBOCs lost a combined 4.5 million fixed-lines in 2006, yet, accounted for less than 300,000 of the total 4.4 million VoIP subscribers added during the year.

Cable operators continue to market VoIP as plain-old-telephone service and the RBOCs do not even include VoIP in their triple-play service bundles. If the consumer VoIP market is representative of the future telecom industry, the U.S. consumers may be the big losers.

In-Stat believes that one cannot criticize U.S. wireline and cable operators for capitalizing on a duopoly market that the FCC bestowed upon them to maximize ARPU and introduce new technology in a time-frame they dictate. But there is no guarantee that consumers will always look to these incumbent operators for voice service.

The farther the U.S. falls behind in next-generation consumer services, the greater the opportunity for market alternatives. If and when these options eventually reach the market, then -- and only then -- will Americans truly experience something similar to the vibrant European telecom services marketplace.

In-Stat's soon-to-be published research report entitled "Europe Leads the Booming Consumer VoIP Market," examines the development of consumer VoIP markets worldwide. The report provides an in-depth analysis of consumer VoIP markets by geographic region and postulates about global VoIP's long-term future.

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