A two-speed Europe for retail VoIP services is emerging, with France, Italy and Sweden leading the way and the UK at the back of the pack, according to newly published research.
A report from Analysys predicts that a complex set of factors will influence the development of the retail VoIP market across Europe.
Significant discrepancies in the level of Pots (plain old telephony service) pricing between country markets, and equally significant differences in the competitive landscape for broadband, have created a patchwork landscape in which retail VoIP has gained a foothold.
"The launch of retail VoIP services, and the take-up of those services, has so far been strong in some European markets while nearly non-existent in others, " said Dr Rupert Wood, author of the report.
The study suggests that by 2010 retail residential VoIP will capture 27 per cent of fixed minutes in Sweden, 24 per cent in France and 23 per cent in Italy, but only nine per cent in the UK.
"Mass-market local loop unbundling has provided a real spur to retail VoIP, but in many markets broadband is dominated by players with a vested interest in preserving traditional voice," said Dr Wood.
"Where the voice market is already highly competitive, smaller ISPs and pure-play VoIP service providers will find that they have very little room to price competitively while covering their costs."
The telecoms analyst found that, despite high-profile VoIP service launches across Europe, competitive Pots is still frequently cheaper than VoIP.
From the end-customer point of view, retail VoIP is defined by Analysys as " simply another form of fixed voice".
Even in countries such as France and Italy, where broadband use is well penetrated by VoIP, retail VoIP is expected to account for as little as 11 per cent of all voice minutes because fixed-mobile substitution is already well advanced in those countries.
But countries such as Sweden, where fixed-mobile substitution has had relatively little effect, may see retail VoIP capture 22 per cent of all minutes.
The report also shows how incumbents' responses to retail VoIP will affect the technology's popularity. Some incumbents will have little option but to enter a retail VoIP market or dramatically cut Pots prices.
Others subject to less intense immediate competition will bank on the transformation of their core network to VoIP to deliver huge savings in operating costs and hence a competitive advantage.
"One factor that could dramatically affect VoIP take-up is naked DSL, namely the supply of either wholesale or retail DSL by an incumbent without a Pots charge and service," explained Wood. "But without regulatory pressure, most incumbents will strongly resist naked DSL."
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