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Story URL: http://www.silicon.com/research/specialreports/voip/0,3800004463,39151715,00.htm

VoIP muscles in on telcos' traditional business
As tech wins mainstream acceptance

By Sylvia Carr

Published: Thursday 25 August 2005

Evidence continues to mount that internet telephony will alter the telecoms landscape - and is no longer an upstart technology but a market worth serious money.

Voice over IP (VoIP) is becoming a serious threat to incumbent telcos and mobile operators alike, according to a new report from the OECD (Organisation for Economic Co-operation and Development).

Since 2003 a trend has developed in OECD countries of falling numbers of fixed-line customers, which is hitting telco revenues.

Mobile operators could also be hurt by VoIP as Wi-Fi coverage increases and people make voice calls over wireless data networks, said the OECD. To survive, the organisation recommends 3G operators convince more customers to sign up to long-term contracts.

Meanwhile a separate report from Infonetics Research shows a sharp rise in the uptake of VoIP. Sales of next-generation voice equipment worldwide rose 18 per cent to $164m in the second quarter of 2005 from the previous quarter - the highest growth seen in the four years since the analyst released its Service Provider Next Gen Voice Equipment report.

The analyst has bold predictions for the future too, saying that by 2008 revenues will grow to $5.7bn and VoIP penetration in north America and Europe will reach 40 per cent.

This is due to increased confidence in the technology and more mainstream acceptance.

"Lingering doubts and inhibitors - such as product maturity and interoperability, and unproven business models - are steadily diminishing, leading to increased investment," the report said.

"It's no longer just specialist providers or VoIP pioneers but all types in all regions of the world adopting the technology and using it to build new service offerings."