Sunday, November 07, 2004

Skype et al. getting a threat for telcos? 

Web Calls May Be More Popular Than Thought - according to a survey done by Analysys.

Yahoo News cites Analysys:

"Making cheap telephone calls over the Internet could be much more popular among consumers than previously estimated, leaving incumbent telecom service providers highly vulnerable, a survey revealed on Thursday.

Over 50 million western European consumers with a broadband Internet connection at home may use telephony software and special phones by 2008, British research group Analysys found.

"The impact on traditional telephony providers' revenues could reach 6.4 billion euros in 2008, representing 13 percent of the residential fixed-line voice market," said analyst Stephen Sale, adding this was a worst case scenario drawn up for operators who want to know how badly they can be hit.


Two weeks ago, Luxemburg-based Skype said it had reached the milestone of one million simultaneous callers. Calls are usually made from computer to computer, although Skype sells a service where PC users can call normal phones at low per minute charges.

Skype and rivals like Popular Telephony are working with hardware manufacturers like Siemens, Cisco and Plantronics to develop VoIP-enabled home phones that plug into broadband modems.


Operators are divided over what they should do.

The chief executives of Deutsche Telekom and British Telecom , two of Europe's top phone carriers, differed in their views on how to counter the decline of their traditional fixed-line sales.

British Telecom's Ben Verwaayen said the telecoms industry has to prepare for next-generation Internet networks. Kai-Uwe Ricke, meanwhile, saw his voice telephony business threatened mainly by mobile phones. summes this up in the headline of their article:

VoIP rings death knell for traditional telephony

In a worst-case scenario, incumbents could potentially lose over €3.3bn of subscription revenues in 2008, and cumulatively about €6.4bn over the period 2004-08.

Overall, the total revenues (subscriptions and calls) lost by incumbent PSTN providers could reach as much as 13 per cent of the voice market in western Europe in 2008, the study estimates.

"Private VoIP applications will contribute to an acceleration of existing trends, including a stronger horizontal industry realignment around communities, segments and brands, with lower prices and increased service convergence," explained Sale.

"In the short to medium term, the voice market could even expand as innovative applications provide opportunities for increased usage, slowing the current decline in revenues.

"In the longer term, however, private VoIP applications are likely to further decrease voice revenues. But they will also help tie those voice revenues to other communications services, thus offering voice players routes to potential new revenue streams."

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