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U.S. Lags Europe in VoIP
2007-07-10
The United States continues to fall further behind Europe in its adoption of Internet telephony for consumers, according to a report released on Monday.
The growing gap could further stifle U.S. investment in new services and equipment, and contribute to the speedy demise of independent voice over Internet Protocol (VoIP) service providers such as Vonage, according to the report from research firm In-Stat.
More than 14 million Europeans subscribed to VoIP services in 2006, raising the total number of users to 19 million by the end of last year, said In-Stat. The research firm forecast that the number of European subscribers would almost double to about 34 million by the end of this year.
The U.S., in comparison, added just 4 million VoIP users last year, for a total of 10.6 million subscribers. The number was expected to grow about 50 per cent to 15.9 million by the end of 2007.
In-Stat also said the global VoIP market was expected to grow from $ 15.4 billion in 2006 to $ 44 billion in 2011. The U.S. currently accounts for less than 20 percent of the global market.
Zeus Kerravala, an analyst with Yankee Group, said demand for VoIP services was lower in the United States than in Europe because traditional phone services are cheaper in the U.S. and Americans also make far fewer international calls.
“Where the value proposition for VoIP is simply cost savings, you are never going to see the kind of adoption rates in North America that you see in Europe,” Mr. Kerravala said.
In-Stat analyst Keith Nissen said weak demand has dissuaded U.S. phone carriers and cable operators from investing in and marketing VoIP services. That, in turn, has limited the level of venture capital investment in U.S. VoIP startups, which to date include troubled SunRocket and Vonage.
Carriers have instead have spent billions of dollars to develop third generation data services, including mobile video, but consumers have largely shied away from these offerings. That has forced carriers to rely too much on traditional voice services.
“They are becoming more defensive and protecting their revenue from traditional voice,” said Mr. Nissen. But he warned that going into defensive mode on voice will squelch innovation and private investment.
The solution for the carriers is to consolidate their landline and mobile networks and promote converged technologies, such as dual-mode phones that operate on both the landline network and the mobile network, he said.
“Carriers must engage VoIP,” Mr. Nissen said. “They will not grow new revenue selling traditional voice. They will do that with new converged multimedia applications.”
By Cassimir Medford
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