David Bird
15-08-06, 09:57 AM
CHEAP internet-based telephone services grew by 500 per cent last year and will increasingly slash the money telcos make from fixed-line services, an industry researcher says.
Telsyte has predicted voice-over-internet-protocol (VoIP) services will grow tenfold over the next four years, increasing the pressure on telcos to offer the service or risk losing customers.
Instead of using telephone lines from one end to the other, VoIP involves connecting a phone to a computer instead of a telephone socket, converting a caller's voice to packets of data, and then converting it back to voice when the call has reached its destination.
While free VoIP calls avoid fixed-line networks altogether because they are made directly from one computer to another, paid VoIP calls are also transmitted using the internet and use the traditional fixed-line network only for the small distance from a telephone exchange to a customer, effectively making STD calls obsolete.
Telsyte managing director Warren Chaisatien said that for every $1 a customer spent on paid VoIP calls, established telcos lost $5 in fixed-line revenue due to the lower cost of internet-based calls.
"Although the voice-over-IP market today remains relatively small, the importance of it is that it is taking away five times the revenue it is generating away from traditional telco providers," he said.
According to Telsyte, there were 250,000 paid VoIP users in Australia at the end of last year who generated a combined total of $80 million in revenue.
Residential customers spent an average of $16 a month, about a quarter of what residential fixed-line customers spent, and business customers $52.
Mr Chaisatien said most VoIP providers began as small start-up companies because large established telcos were worried that introducing VoIP could hurt their fixed-line revenue. "I think they are between a rock and a hard place," he said. "I think they know that if they don't do it somebody else will … but if they do it they are cannibalising themselves. Sooner or later, they will be forced to get into the voice-over-IP game."
Mr Chaisatien said the fact VoIP providers did not usually have a guaranteed level of service dissuaded some residential customers from abandoning their fixed-line phones, for fear VoIP would not work in an emergency.
Jesse Hogan
August 15, 2006
Source (http://www.theage.com.au/news/business/voip-voice-of-doom-for-telcos/2006/08/14/1155407742092.html)
Telsyte has predicted voice-over-internet-protocol (VoIP) services will grow tenfold over the next four years, increasing the pressure on telcos to offer the service or risk losing customers.
Instead of using telephone lines from one end to the other, VoIP involves connecting a phone to a computer instead of a telephone socket, converting a caller's voice to packets of data, and then converting it back to voice when the call has reached its destination.
While free VoIP calls avoid fixed-line networks altogether because they are made directly from one computer to another, paid VoIP calls are also transmitted using the internet and use the traditional fixed-line network only for the small distance from a telephone exchange to a customer, effectively making STD calls obsolete.
Telsyte managing director Warren Chaisatien said that for every $1 a customer spent on paid VoIP calls, established telcos lost $5 in fixed-line revenue due to the lower cost of internet-based calls.
"Although the voice-over-IP market today remains relatively small, the importance of it is that it is taking away five times the revenue it is generating away from traditional telco providers," he said.
According to Telsyte, there were 250,000 paid VoIP users in Australia at the end of last year who generated a combined total of $80 million in revenue.
Residential customers spent an average of $16 a month, about a quarter of what residential fixed-line customers spent, and business customers $52.
Mr Chaisatien said most VoIP providers began as small start-up companies because large established telcos were worried that introducing VoIP could hurt their fixed-line revenue. "I think they are between a rock and a hard place," he said. "I think they know that if they don't do it somebody else will … but if they do it they are cannibalising themselves. Sooner or later, they will be forced to get into the voice-over-IP game."
Mr Chaisatien said the fact VoIP providers did not usually have a guaranteed level of service dissuaded some residential customers from abandoning their fixed-line phones, for fear VoIP would not work in an emergency.
Jesse Hogan
August 15, 2006
Source (http://www.theage.com.au/news/business/voip-voice-of-doom-for-telcos/2006/08/14/1155407742092.html)