Canadians get their VoIP groove on

Despite a slow start, the Canadians are finally embracing Internet Telephony. According to, the playing field now includes Primus Telecommunications Canada Inc., Comwave Telecom Inc., Vonage Holdings Corp., Nicer Technologies Inc. and BabyTel. Telus Corp., AOL Canada Inc., Saskatchewan Telecommunications Holding Corp. and Yak Communications Inc. plan to launch services later this year. Telus plans to start offering the service later this year, but the other two biggies, Rogers and Bell Canada have no concrete plans as yet.

“There is not a lot of inertia to push people to look at new alternatives. We’re just spoiled,” Jon Arnold, an analyst with Frost & Sullivan said. “For consumers, price will attract them but I don’t see enough margin for Voice over Internet Protocol providers in Canada to drop prices to get a lot of [customer] migration.”

Given the small size of the market, my feeling is that the Canadian Internet market is going to take a long time developing. The excessive number of players could lead to price wars which is going to cause problems for some, and profit nightmares for the industry in general.

Frost & Sullivan estimates there will be 128,000 Canadian Internet telephony customers by the end of this year; 375,000 in 2005; 713,000 in 2006; 1.15 million in 2007; and 1.58 million in 2008. In the United States, subscriber growth is expect to jump to 1.16 million this year from 100,000 in 2003. By 2008, Frost & Sullivan forecasts there will be 16.5 million subscribers in the United States.

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