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VoIP – enemy or friend?

: Monday, December 19 - 2005 @ 14:34

Some services using VoIP may only allow you to call other people using the same service, but others may allow you to call anyone who has a telephone line of any type – including local, long distance, mobile, and international numbers. Also, while some services only work over your computer or a special VoIP phone, other services allow you to use a traditional phone through an adaptor.

The majority of comments paint VoIP as an enemy, a serious threat to existing operators, especially for voice revenues which seem to be in decline recently by anything between 5% and 9%. Further competition comes from the mobile service providers who have also priced their voice packages quite aggressively and their roll out has created further capacity.

The larger operators will see benefits from reduced operating expenditure from voice and broadband service. For a national provider this can be a substantial saving. In the UK BT has estimated this saving to be in the region of 40% of the current level of their Opex. Players such as Cisco, Avaya and Nortel are pushing IP telephony to the business market across the USA and Europe. It is not all about cost saving either. Although I believe that IP telephony will be examined as a tool to reduce cost, ultimately it will be about additional efficiencies and benefits from the integration of telephony and applications.

By 2010 all calls on the BT core and metro networks will be VoIP. This estimates a saving of around £1 billion per annum on network maintenance and points to leadership for fixed to mobile convergence. This initiative is known as the 21CN and was announced in 2004 as part of BT’s major commitment to delivering leading edge telecommunications for the Olympics in London, 2012.

Although the corporate world is moving fast to VoIP the consumer picture is slower. Looking at the USA more closely we see differing results. Despite forecasts of new telecommunications technologies being rapidly adopted in the U.S., the latest survey from TNS Telecoms indicates that most Americans still have a low awareness of Voice over IP technology. According to the TNS survey, in the USA only 26 percent of households with Internet access report having previously heard of VoIP after it was described to them. Incidentally, 67 percent of all U.S. households now have some type of Internet access.

“While the VoIP service is still relatively new, the results seem to confirm the product is still in the early adopter stage of its lifecycle in the U.S.,” stated Tacis Gavoyannis of TNS. “Consumers are receptive to the service quality, cost savings and other benefits VoIP offers, but providers need to make an increased effort to communicate these benefits to the marketplace.”

Despite recent studies that have forecast a proliferation of VoIP in the next few years, the TNS survey shows that very few consumers have even heard of the service. This level of awareness is virtually unchanged from a year ago, when a poll found only 27 percent of Internet users in the U.S. had heard of VoIP. Other studies have implied a similar disparity between consumer and business awareness, with most business decision makers aware of the service.

BT is making a serious investment of £10 billion for 21CN; this is roughly twice the cost of the 3G licence and the associated network. This is obviously a strong investment – but considering the benefits of fixed to mobile convergence and additional broadband applications a strong operator could well be saving a similar amount in Opex.

VoIP seems to have a great future in the corporate world ; and although the consumer sector has not embraced it yet I believe this is more to do with offerings and education rather than any lack of potential. The networks are gearing up for a future that has richer applications and much more choice of infotainment. And as such, I see VoIP as a Friend.

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Monday, December 19- 2005 @ 14:34 UAE local time (GMT+4) Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Mediaquest FZ LLC.

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