Emerging IP telephony service providers will need to undercut traditional telcos by up to 50 per cent if they are to hit their ambitious growth targets, warn analysts.
According a report by consultants Schema, entitled "Communications in the Internet era: The market for IP based services in Europe", international IP calls will surge over the next five years. However this alone will not generate significant profit for new suppliers.
Schema calculates that around 20 per cent of international calls from the main European countries will be made using IP technology, at dramatically lower prices than today's PSTN tariffs. Traditional telco rates are also spiralling themselves.
IP telephony use on corporate networks will grow from a virtually zero base today to more than two million European business sites by 2003.
Said Schema senior consultant, Robin Duke-Woolley: "Using IP telephony for international calls will turn out to be a race against falling tariffs, with service providers needing to become established quickly and then extending their offerings to include a range of new voice and multimedia related value added services. IP telephony service providers will not survive for long offering basic international calling services alone."
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