VoIP Growing at Internet Speed

Voice over Internet Protocol (VoIP) is beginning to break out into a more rapid period of growth, fueled by the rollout of the service by trusted telecommunications providers, according to a new report on the emerging trend.

IDC said VoIP has “clearly come into its own in the U.S.” as major incumbent telecoms start to offer the service alongside startups such as Vonage. IDC estimates some 3 million Americans are currently signed up for VoIP, a number that will grow nine-fold to 27 million by the end of 2009.

Service Capabilities

The firm said that VoIP has been slow to get rolling but is “finally beginning to show its potential in the consumer market.” Going forward, the value proposition of VoIP will become less about price, the major selling point today, and more about service capabilities.

“VoIP must prove that it is more than just a cheap replacement for” traditional services, said William Stofega, senior analyst in IDC’s VoIP Services Research program. “To do this, carriers will need to offer services that are compelling and affordable.”

That should be fairly easy, IDC argues, since the inherent nature of the data-communication methods used to transport voice traffic over high-speed networks lends itself to being used for multiple services at once.

“The winners will use the flexibility of IP to design services that differentiate themselves from their competitors,” Stofega added. “However, it is important to remember that the market for VoIP services is still in the very early stages of development and carriers and equipment vendors need to plan for a marathon.”

More to Come

The critical mass of users of VoIP will be fueled not only by traditional telecoms getting into the business, but also new players, such as cable providers.

However, the growth will be confined mainly to at-home residential users, at least initially, IDC said.

That means that developments being envisioned in the mobile arena, where wireless calls are routed onto data networks, possibly through WiFi connections that could make calls significantly less expensive, might still be some time away.

VoIP has found traction in enterprises as well, and the technology got a huge boost recently when the Department of Defense said it would ask Nortel Networks to convert a massive phone network to VoIP.

Not so Fast?

However, some analysts see hurdles remaining in the way of widespread adoption. The technology is still evolving, for instance, and many early adopters complain about crackling calls or other interference. In addition, early services have been less reliable. There is also the matter of emergency calling — there is no standard for enhanced-911 calling, which can automatically direct emergency services to the address from which a call originates.

“Consumers will go slowly at first, keeping their landlines to hedge against bad or unreliable service,” independent telecom analyst Jeff Kagan told the E-Commerce Times. “But there’s no question the trend is toward more adoption as time goes on, particularly with the arrival of the big carriers.”

One thing that virtually all analysts agree is on that VoIP is just one example of a total shift in the telecommunications industry away from traditional models toward new ones that have yet to be fully formed. “Tomorrow’s voice and data services are going to bear very little resemblance to today’s,” Kagan said.