VoIP Growing Astronomically, $23.4 Billion By 2009 Projected

Already on a tear, VoIP service is predicted to grow 18-fold -- from $1.24 billion in 2004 to $23.4 billion in 2009 -- representing total revenues of $62 billion to be spent on the technology over the five-year period, according to a report released Wednesday.

The figures were contained in a report from Infonetics that also predicted 24 million subscribers will be using VoIP service in 2008.

In an interview, Kevin Mitchell, Infonetics principal analyst, Service Provider Next Gen Voice & Mobile Core, noted that Vonage leads the residential and SoHO VoIP subscriber market with 32 percent market share.

The report marks movement among the top three providers. Vonage, the leader, with more than one million subscribers, has seen its market share drop to 32 percent from 36 percent in the first quarter of 2005. Cablevision dropped to 19 percent market share from 21 percent. Time Warner Cable, on the other hand, has been gaining, from 21 percent in the first quarter to 25 percent in the current report.

“Time Warner was playing around with VoIP for sometime,” Mitchell said. “At the end of last year they brought it out for full availability in all Time Warner markets in their footprint. Time Warner has tens of millions of cable subscribers.”Cable companies have an advantage in VoIP because many of their customers already have broadband service, which is a necessary ingredient for VoIP. Mitchell noted that other cable firms are likewise offering VoIP, albeit in different flavors. Many cable firms are offering VoIP over antiquated TDM technology.

Many VoIP users with cable-based systems may not even know they are calling over VoIP, said Mitchell, observing that cable companies often market VoIP using names such as “Digital Phone.” Noting that cable companies spent several months perfecting their VoIP offerings, Mitchell said marketing of VoIP by cable firms has been gathering momentum in recent months.

The situation is different with telephone companies. “The Telcos,” said Mitchell, “will get there, but not as rapidly.”

He explained that the major telephone companies are moving to introduce fiber and that VoIP is likely to be increasingly used when fiber’s deployment is more widespread. Mitchell noted that large North American telephone companies such as Verizon, Qwest, and Bell Canada offer VoIP services and that the firms are learning from the early deployment of the IP calling services.

Asked whether “VoIP filtering” -- nascent efforts to block VoIP -- would likely impact the growth of VoIP, Mitchell said he doubted it. The outcry from consumers, he explained, would be fierce at attempts to block VoIP, and he didn't think entrenched telecom firms would attempt to block the service anyway.The Infonetics report did not include figures for Luxembourg-based Skype Technologies, which specializes in international VoIP calling. Skype, which is being acquired by eBay has more than 60 million subscribers.