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On Broadband, VoIP Finds Its Voice

I distinctly remember the days when VoIP was nothing but a curiosity — a choppy and quixotic experience at best, when our fastest consumer Internet was a 128 kbps ISDN connection. It was back when Verizon ( s VZ) was called Bell Atlantic.

We’ve come along way from those early days. Today, one in five broadband lines has a VoIP service attached to it, according to industry analyst Point Topic, which estimates nearly 22 percent of consumer broadband lines have a VoIP service. That’s about 112 million lines at the half-way mark in 2010 — and no, this doesn’t include folks like Skype.

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One of the biggest VoIP markets is France, where bitter competition between upstarts like Xavier Niel’s Free and France Telecom has made low-cost VoIP service a standard part of a broadband package. Nearly 70 percent of French households have VoIP. The U.S. is the largest market by sheer numbers, thanks to cable companies selling VoIP as part of their bundled subscriptions; while in China, only one in 20 broadband connections has VoIP.

As much as wired VoIP services have grown, however, the fact remains that VoIP’s future is on mobile. The massive growth of Skype, the explosion in the number of Nimbuzz users and the growing popularity of other services is a sign that with the rise of the smartphones, VoIP has a new growth engine. According to In-Stat research, there will be 288 million VoIP users by 2013. Mobile has to pay a role in that, especially as we enter the era of 3.5 and 4G wireless broadband. It all makes you wonder: What is the future of the traditional landline?

?Related research from GigaOM PRO (subscription required):

8 Responses to “On Broadband, VoIP Finds Its Voice”

  1. Om – you make very good points but should also note the growth of VoIP within the enterprise. More and more businesses, particularly small companies and startups, are using VoIP and hosted PBX services.
    In essence, companies are only using the “local phone company” for Internet service. With the growth of hosted VoIP and IPTV – times are definitely changing in communication.

  2. Om, interesting how Europe is so far ahead of the States.
    What I think is more important is – not if you have or don’t have VoIP, but what you do with it. On that, we are just starting to see the beginning, with all the cloud based enablers sprouting endless applications.

    • i see a different attitude on the part of the VOIP companies in europe versus the states. european operators seems more focused on offering value to customers such as free calls to a 100 countries, etc., american companies on the other hand seem more interested in offering ‘value added’ services such as fancy voicemail boxes and call routing that earn them more money but also cost the customers more.

      offering as near a duplicate to a landline as possible while saving your customers money is a recipe for success. selling features does not bring as many customers.

      • Tom

        maybe it is because the US, voice had hit the flat rate levels and for now all they can do is offer value-added services.

        I am actually surprised people buy voice from cable companies considering that it is actually more expensive that other offerings from phone company.

        The big difference is that most European companies think (rightfully) that Voice is an app on IP network and it should be treated in a similar fashion.

      • “offering as near a duplicate to a landline as possible while saving your customers money is a recipe for success. selling features does not bring as many customers.”

        Tom, I beg to differ, yes it is a recipe for success for the mega carriers, however for companies like us (Flat Planet Phone Company) or for the many new hosted application platforms such as ifbyphone, twillio, tropo and others, value added features for business is THE recipe for success.

        VoIP opens tremendous opportunities for businesses to
        better serve their customers and businesses are willing to pay for a lot for this added value. Selling cheap voice is very boring, why would I do it?? I would much rather provide exciting solutions that enable businesses to do things they never dreamed they could do. That is a win win proposition.
        Saving money by us is a byproduct. Providing better service is THE product!