VoIP Subs To Reach 20 Million Mark In 2008

By Greg Scoblete -- TWICE, 4/7/2008

WASHINGTON — The number of U.S. VoIP subscribers will near the 20 million mark by the end of the year, according to the research firm TeleGeography.

VoIP subscriptions reached 14.9 million last year as companies added 5.7 million new users in 2007 vs. 5.1 million in 2006, although growth was slower than in previous years, TeleGeography said.

VoIP revenue was up sharply, climbing from $2.6 billion in 2006 to $5.7 billion in 2007.

Stand-alone VoIP firms, or "enhanced service providers" (ESPs) accounted for 3.5 million subscribers, up 14 percent from 2006. TeleGeography characterized ESPs as a "spent force" when compared to cable multiple systems operator (MSOs), which added 5.3 million subscribers in 2007, or 93 percent of all new VoIP subscribers for the year.

"Comcast added more subs in one quarter than all the ESPs did for the year," said Stephan Beckert, TeleGeography research director. "The market is clearly moving to cable."

Comcast was the market leader in 2007, with 4.3 million VoIP subs by year's end, followed by Time Warner, with roughly 2.9 million, and Vonage at 2.5 million. Rounding out the top five were Cablevision at a little more than 1.5 million and Charter, with just fewer than 1 million subscribers.

The onslaught of cable-delivered VoIP won't push the ESP category into extinction, Beckert added. With several million subscribers, they occupy a "sizeable niche" of educated customers unlikely to seek out MSO-delivered VoIP, Beckert said.

There is pressure on ESPs to heighten their differentiation through technology, Beckert said. "I see little evidence that consumers are interested in more technology," he said. "They want a dial tone."

Despite the large user base for Skype, users of subscription-based VoIP services from cable companies and ESPs spent more time talking and spent far more money on their IP telephony services than their Skype compatriots. According to TeleGeography, Skype users in the United States generated roughly 4 percent as much voice traffic as those using cable or ESP VoIP in 2007.

The revenue generated by Skype's U.S. callers amounted to less than one-half of 1 percent of revenues from MSO/ESP VoIP services.