Internet Telephone Service

VoIP to Reach $4 Billion by 2010

July 20, 2005

According Frost & Sullivan, Voice over Internet Protocol in North America is on the verge of an extraordinary growth spurt over the next six years due to the plague of broadband Internet service and the low cost and long distance services.

Frost & Sullivan's newly-released report, North American Residential VoIP Markets, shows that the VoIP market will reach over $4 billion in 2010, a gain of more than 1300% from the nearly $300 million last year. The report also shows that the amount of VoIP lines that will pop up will increase to 18 million from 1.5 million that currently exist and there will be an increase in non-traditional telecommunication companies, including cable operators, ISP, and non-telecom companies. Incumbent local exchange carriers (ILECs) tend to feel that VoIP as a threat to their market share and revenue. According to the report, ILECs have lost 15 million access lines to their competitors for data lines and second residential lines.

Frost & Sullivan Senior Analyst Lynda Starr said in a statement, "Residential subscribers are likely to replace second lines with wireless or VoIP; the benefits of VoIP include lower cost, additional features and ease of use. If an ILEC offers VoIP, it risks cannibalizing traditional revenue but also opens up new revenue streams."

Frost & Sullivan feel that in order for the VoIP growth to grow, it needs to offer quality service and real features, not just a promise of new technology. New telephony and media features as well a consistent E-911 service will ensure VoIP's success.

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