Residential VoIP Growing Worldwide

VoIP in the home isn’t just for geeks anymore. A new study from research firm Frost & Sullivan has found that residential VoIP in North American is now moving from the early adopter stage to mass market adoption.

In 2004, Frost & Sullivan estimated that North American residential VoIP revenue hit $295 million dollars. By 2010 that number is forecast to skyrocket up to $4 billion in revenue. Revenue growth is expected on the back of VoIP line growth, which is expected to burgeon from 1.5 million in 2004 to 18 million in 2010. ISPs, cable companies, and other non-telcos are all likely to jump into the VoIP market, further driving growth.

“The pleasant, albeit somewhat expected, surprise was that the residential VoIP market is moving beyond early adopter to mass market,” Frost & Sullivan analyst Lynda Starr told “Price breaks alone will not satisfy these consumers. They need value, including customer service.”

Nonetheless, according to the report, initial interest in VoIP will first come from the potential cost savings. Advanced features such as web-based call logs, virtual numbers, and videoconferencing will also help push adoption, as well as increase customer satisfaction.

Residential second lines are likely candidates to be replaced with VoIP in Starr’s opinion. She also cautions that VoIP for the mass market is not necessarily a substitute for the plain old telephone service (POTS).

“Providers need to play up the features and not position the service as a POTS substitute,” Starr said. “VoIP-based services enable such features as unified messaging and multimedia applications.”

Worldwide retail VoIP
A recent study from UK-based Point Topic estimated that at the end of March 2005 there were over 11 million retail VoIP users. Point Topic’s total did not include soft client services such as Skype.

Though Skype boasts over 130 million downloads and 35 million or so registered users, Point Topic doesn’t consider them to all be active. Based on it own analysis of minutes served by Skype, Point Topic estimated that active Skype users only add an additional 5.3 million to the total number of retail VoIP users (which would bring the total residential VoIP user base as at March 2005 to 16.3 million users worldwide).

According to Point Topic the largest retail VoIP market in the world is currently Japan with 7.2 million users. Japans retail VoIP population has been bolstered thanks to a bundled broadband service from Yahoo Softbank. In Europe the largest retail VoIP market is France with 1.2 million subscribers at the end of March 2005.

Point Topic estimated that at the end of the first quarter of 2005, there were 2.1 million retail VoIP subscribers in the U.S.

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