Time For A Little VoIP Reality Check
By Om Malik

If you follow the blogs, it would seem that VoIP is the magic potion that can make you live till you’re 125. Well unfortunately that is not the case, and I think it is time to take stock, sort of a reality check. Not trying to belittle the achievements of the industry in past three years, but still, people lets take a deep breath because VoIP is the long haul. Since I am always accused of being a curmudgeon, well let me do it. I pored through two reports - one from Telegeography and the other from Point Topic - during lunch break today, and found some amazing truths. (And a warning to those who indiscriminately invest in VoIP service plays!)

• Point Topic estimates that over 11 million people were using a retail voice over IP (VoIP) service for at least some of their telephone calls at the end of March 2005. Of these 11 million, well over half, 7.2 million, are in Japan. Yahoo Softbank provides the majority of these services, and they come bundled with the broadband subscription. Some have expressed doubts and don’t think that these are pure VoIP subscribers, but lets include them anyway.
• France is the largest market for VoIP in Europe, with 1.2million subscribers by the end of the first quarter. Most of these lines are provisioned by Free and Neuf, using a plug and play set top box.
• Telegeography puts the number of Americans using VoIP: 1.8 million, a number expected to grow to 4 million by end of 2005. In comparison, SBC had 51.9 million access lines.

• For 2004 US VoIP revenues were $200 million. SBC’s first quarter consumer fixed line revenues - $3.9 billion.
• Point Topic says American cable sector is numerically the most important VoIP sector, with around 2.1 million subscribers. This cannot be correct number because at the end of first quarter there were 1.8 million VoIP subscribers in the US, as per Telegeography. Looks like they are including Cox, which is still less than a third VoIP. Nevertheless, Cable MSOs now account for 46% of total VoIP subscribers, and independents like Vonage account for 41%. That number is going to slide downwards.
• Telegeography estimates that by 2010 there will be 17.5 million VoIP users in US and revenues of $5 billion. That is a pittance, and don’t get me wrong, a blooming pittance.

The best bit was at the very end of the report from Telegeography, where they asked 1500 random users about VoIP, and the interest in VoIP was peaked when the prices came in around $20. So there you go folks - cheap is the only reason to go VoIP, and well nobody is cheaper than Skype right now. However, the most interesting part of the survey was that despite all that, more people were going to go all wireless for their voice needs. Ouch… so if T-Mobile offers a $50 a month all you can eat VoIP plan, well you know who gets stiffed. The survey while not exactly scientific tells me that all the fancy features, soft-phones and management consoles don’t mean squat when it comes to mass market. Its all about cheap cheap cheap!