Broadband IP Telephony Growing Steadily

Vonage is adding 20,000 new lines a month, while AT&T's CallVantage promises one million subscribers by end of '05.
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Scottsdale, AZ--With Vonage adding nearly 20,000 new lines a month and AT&T's CallVantage promising one million subscribers by end of 2005, the US Broadband IP Telephony market will have strong growth over the next several years, according to new data from In-Stat/MDR (http://www.instat.com).

The research firm reported that, while there were only 144,000 subscribers at the end of 2003, lower service cost and compelling new communications features are driving service adoption.

Broadband IP telephony provides for voice communications over a broadband connection using Voice over IP (VoIP). The voice traffic can then either be routed over the public Internet or a carrier's private IP backbone. Unlike older VoIP services, Broadband IP Telephony allows for both inbound and outbound voice traffic, and can function as a primary voice line.

"Service providers are attracted to the service not only for its revenue potential, but because it gives them an alternative, local strategy to reselling a Regional Bell Operating Company's (RBOC's) network," said In-Stat/MDRs senior analyst, Daryl Schoolar. The market however isn't without its challenges, chief among them being regulatory uncertainty. According to Schoolar, "Until all of the regulatory issues surrounding Broadband IP Telephony are resolved potential investors will be weary of putting their money into a service provider that could lose its entire market advantage due to an unfavorable ruling." Other challenges facing this market involve service security and competing forms of voice services.

In-Stat/MDR has also found that:

At the end of 2003, Vonage had the largest share of subscribers, with 66 percent of the market. The combined efforts of cable operators had a decent share and other hosted Broadband IP Telephony providers controlled the rest of the market.

Overall, the market for Broadband IP telephony in the US consists mainly of consumer subscribers. While this service targets primarily consumers, there are some business service offerings. However, the nature of the service limits it to only the smallest of offices needing few voice-lines.

10.3 percent of all broadband subscribers will utilize Broadband IP Telephony by the end of 2008.
For more information, visit www.instat.com.

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