Some thoughts on the VoIP market.
I was talking to a cable TV installer working at my kid’s place yesterday. He tells me that his firm is having trouble keeping up with the demand for their digital phone service.
A headline last week in Networking Pipeline read New Study: Kiss Traditional Telephones Good-Bye. So I thought it might be worth taking a look. I thought I would want to read about how the take-up of VoIP services must be exploding.
A new study from PointTopic found that VoIP subscribers jumped by 83% in 2005, and hit nearly 19 million subscribers worldwide. It’s just one more piece of evidence that traditional telephone [sic] are going the way of the horse and buggy.
Well then, it must be true. We’re just around the corner from tossing out our Contempra phones and that refurbished antique oak phone (circa 1918). At the time, it seemed to be such a great gift for my birthday.
So I went to the PointTopic study and found that I had trouble correlating what Networking Pipeline was saying to the original study.
Networking Pipeline said that the US, Japan and France lead the world in VoIP subscribers and then says that Asia lags behind.
Did Japan move to another region over the summer? I nearly missed the news that Pluto got demoted, so maybe a typhoon hit while my the power was out at my cottage. Actually, the report shows that Asia has almost as many lines as the Americas and Europe combined.
The report says
Asia Pacific has seen the slowest rate of growth in VoIP subscribers. This is mainly due to Japan, the main market, showing a slowdown in VoIP growth. Softbank, the driving force behind Japanese VoIP take-up, has had relatively low subscriber growth during 2005. Even with its high rate of VoIP usage, this has meant a slowdown in overall VoIP numbers.
That is very different from saying that Asia is lagging. In fact, it might be a preliminary indication that in Japan, the current service offerings are past the point of inflection in the demand curve.
The report notes that the term ‘VoIP’ is generally not mentioned by cable companies in North America. The name of the game is Digital Voice. It seems to me that one of the success factors for continued cable telephony adoption is letting people remain in somewhat familiar territory, coupled with the allure of advanced ‘digital quality.’ Do we really care what cable companies call it?
There is also a problem with nomenclature. What do we call the millions of VoIP – PBX systems that are connected to the PSTN with conventional TDM lines? Are they not included in the PointTopic census?
According to the ITU, at the end of 2005, there were 1.264 Billion conventional telephone lines, coupled with 2.137 mobile cellular subscribers.
Watching VoIP skyrocket from 0.31% of the world market to 0.56% is hardly enough data upon which to suggest that the end is in sight. I’m a believer in the potential for VoIP, but let’s not get caught in yet another round of unrealistic forecasting.
As Om Malik notes, India only has 1.7M broadband subscribers, less than 4% of their nearly 50M telephone subscribers. That makes it an unlikely candidate for VoIP replacement in the near term. It will be interesting to see where VoIP makes sense and where alternate technologies, such as wireless, prevail in such places.
Traditional phones going the way of the horse and buggy? Maybe.