The report, Voice Communications: from Public Service to Private
Application, from telecoms consultancy firm Analysys, warns telcos
that by 2008 over 50 million broadband users in Western Europe
could be using private VoIP applications (PVAs).
Voice over Internet Protocol – or VoIP – is the transport of
telephone calls over an internet connection. For users already
paying for a broadband connection, long distance calls can become
free of charge, albeit that VoIP handsets tend to be much more
expensive than standard handsets.
Although VoIP has existed as a technology for much of the last
10 years, the mass market for broadband connections and the recent
emergence of IP telephony-enabling protocols have revolutionised
the sector.
"The recent rapid take-up of one PVA variant – peer-to-peer VoIP
using free downloadable software from providers such as Skype –
raises the possibility of the appearance of a critical mass of PVA
users that could unleash a significant structural change in the
voice market by the removal of a large proportion of PSTN [public
switched telephone network] revenues," warned the report's
co-author Stephen Sale.
"In the residential market, PVAs are typically used to make
longer calls to friends and family, the core telephony business of
fixed-line incumbents. In combination with increased mobile usage,
this could render the PSTN subscription worthless for many
broadband users. Fixed-line voice would face not only mobile
substitution, but PVA substitution as well," he explained.
According to the report, the rapid adoption of PVAs could
generate direct revenues of over €3.5 billion, the bulk (about 85%)
stemming from subscriptions, not call charges. This emphasises,
says Analysys, the huge importance that the subscription element
will have in a future multi-service mix and in establishing PVAs in
the mass market.
In revenue terms, the impact on incumbents of such a shift in
subscriptions from PSTN to PVAs would be great.
According to the report, in a worst-case scenario, incumbents
could potentially lose over €3.3 billion of subscription revenues
in 2008, and cumulatively about €6.4 billion over the period
2004-2008.
Overall, the total revenues (subscriptions and calls) lost by
incumbent PSTN providers could reach as much as 13% of the voice
market in Western Europe in 2008 – a big increase on previous
predictions which, according to Reuters, were around the 5%
mark.
The expectation, said Sale, was that PVAs would increase the
trend towards service convergence, lower prices and a focus on
communities, segments and brands.
"In the short-to-medium term," he continued, "the voice market
could even expand as innovative applications provide opportunities
for increased usage, slowing the current decline in revenues. In
the longer term, however, PVAs are likely to further decrease voice
revenues. But they will also help tie those voice revenues to other
communications services, thus offering voice players routes to
potential new revenue streams."
