VoIP fragmenting US telecoms market

The rapid growth of voice-over-IP (VoIP) services in the US represents a "turning point" as the technology fragments the sector.

According to a report from Analysys Research, convergence will turn the existing market on its head, but will not completely replace traditional PSTN voice services in the immediate future.

"VoIP will have a fundamental impact on all aspects of US telecoms because it causes fragmentation of supply and services offered," said Michael Kende, co-author of the report, in a statement.

"The US voice market will finally lose its monolithic character, but VoIP is unlikely to replace traditional PSTN voice during this decade."

The analyst indicated that VoIP penetration is expected to reach 17 per cent of broadband-enabled households by 2008, growing from under one million at the end of this year to 11.7 million in 2008.

Some 23 per cent of broadband-enabled small businesses will adopt the technology, increasing from less than 100,000 in 2004 to 800,000 in 2008.

Together, consumers and small businesses are expected to provide almost 13 million VoIP subscriptions and $5.7bn in annual services revenue in 2008.

But this represents just 2.5 per cent of the 2003 total US telecoms revenue of $224bn.

For medium and large businesses VoIP growth is also expected to be very strong.

"VoIP has now moved from a behind-the-scenes network migration strategy to a distinct billable service, separable from the underlying network, controllable by the end user, and with its own pricing schemes, features and terminal equipment," said Kende.