The recently released Organization for Economic Co-operation & Development
(OECD) Communications Outlook for 2005 makes it clear: Internet
telephony, or Voice over Internet Protocol (VoIP) is poised
to take over the communications industry.
The report concludes that the growing popularity of VoIP
threatens the fixed-line revenues of traditional carriers
(especially for international calls) and will challenge mobile
telephones - which in many countries are now more numerous
than fixed connections. Mobile operators, which have threatened
the revenue of fixed-line companies in many countries, are
no longer leading the technological revolution.
VoIP allows consumers to make calls over their broadband
Internet connections at rates up to 80 percent lower than
on a traditional fixed-line telephone. VoIP is also particularly
useful to travelers, who pay high tariffs when using their
mobile phones abroad.
History
VoIP services have come a long way over the last ten years.
VoIP first hit the market in the mid-‘90s, pioneered
by such companies as Altigen, Dash, NetPhone and Selsius
Systems. By 1999 data networking giants Cisco and 3Com
began to buy companies that were already marketing products.
Since then, competition between a new class of VoIP providers
has become quite intense:
• IBM and Cisco announced a partnership to sell
VoIP services to businesses; Cisco will provide the hardware
while
IBM will provide the software to run the services.
• BellSouth announced that it will begin selling VoIP services
to businesses.
•
AT&T launched a VoIP calling plan known as CallVantage.
Unlimited calling will cost $39.99 a month.
• Quest Communications announced that it soon will offer consumer
VoIP services.
• Vonage lowered the price of its consumer-focused unlimited
calling plan from $35 to $30. Vonage claims it has signed
up 155,000 customers so far.
• Venture capitalists poured nearly $85 million into new VoIP
service providers: Vonage ($40 million), VoiceGlo ($28
million), and Skype ($18.8 million).
•
Skype, one of the world’s first VoIP companies, currently
claims to have 51 million users. Skypes’ users are
worldwide, however, on a per capita basis, Denmark, Poland
and the Netherlands are the largest users of the service.
Source: FierceVoIP
Google is the latest to join VoIP with its launching of
Google Talk, an internet-based instant message and voice
service.
Microsoft is also getting in on the internet phone sector
with its recent purchase of California-based telephone
service Teleo. It plans to incorporate telephone service
into its instant messaging service by the end of this
year, as Teleo's technology allows computers to make and
receive
standard phone calls. Microsoft, AOL, Google and Yahoo all currently allow phone
calls between computers, but not yet to a domestic or mobile
handset.
Changing an Industry
Neither fixed-line nor mobile operators can afford to ignore the increasing number
of consumers making calls over the internet, the OECD warns. Fixed phones lines
are decreasing in OECD countries. This is a trend that has continued since
2003.
The OECD report forecasts that:
• Service operators will increasingly offer integrated
video, voice and data products in a single service package.
• The growing popularity of downloading video from the Internet
will reduce the time people spend watching free-to-air
TV, driving down audience share and advertising revenue for broadcasters
and making it harder for public-service broadcasters to
meet their social policy objectives.
• Increasing competition from new platforms, notably broadband
Internet, with traditional broadcast or telecoms providers
may require a re-examination of existing regulatory frameworks.
In particular, regulators may need to review obligations
regarding universal telecommunications service as more
companies offer telephone services over the Internet without having
a physical presence in a country.
Source: OECD
Roadblocks
The VoIP industry does have its roadblocks to get through. In the United States,
It is not yet clear to what extent the FCC will regulate VoIP services, and
as of yet, VoIP phone services do not offer the ability to track the location
of 911 calls. In addition, VoIP technology and voice quality are pretty good,
but not yet perfect.
Yet the communications industry can expect even greater
competition among VoIP service providers in the future. The
ultimate winner will be businesses and consumers, who will
benefit from lower prices and new features.
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