Vonage Stays No. 1 In VoIP Competition

By Greg Scoblete On May 22 2006 - 6:00am

Vonage continues to rule the VoIP roost, despite competition flocking in from cable companies, free PC-based services and telecom firms.

According to a study of pure-play VoIP companies by San Francisco-based Telephia Research, Vonage holds 47.5 percent of the market or 1.9 million households. Its other two major retail competitors — AT&T's CallVantage and 8x8's Packet8 service — placed third and sixth respectively. The study did not include Internet-delivered voice services from cable or telecom companies. When counting those services, Vonage's market share narrows but it still retains a lead in subscribers.

Time Warner Cable announced at the end of 2005 that it had reached the 1 million subscriber mark for its VoIP service, which it bills as Digital Phone. According to the company, 75 percent of digital phone subscribers were participating in the Time Warner's so-called triple play of voice, video and data services. Cablevision announced in February that it had hit 730,000 voice subscribers in 2005.

According to Telephia, VoIP penetration increased to 3.9 million households in the United States, from 2.9 percent in 2005.

Voice over IP phone service is projected to reach over 32 million U.S. homes in 2010, according to a new study by Ireland-based research firm Research and Markets. At that point, close to 40 percent of broadband Internet subscribers will be using the service, the firm predicted.

According to research firm Parks Associates, VoIP subscribers aren't ditching landlines en-masse as 49 percent of VoIP subscribers also use a landline phone. The majority — 52 percent — of today's residential VoIP subscribers get their voice as part of a bundled service package, the firm also noted.

About those bundles, Durham, N.C.-based Leichtman Research Group reported recently that 43 percent of consumers surveyed said they live in a household that currently receives a bundle of TV, phone or Internet services from a single company, an increase from last year's 33 percent.

Leichtman Research Group also noted that bundle subscribers are less likely to switch service providers than consumers who subscribe to only a single service.