VoIP services to reach six million users

VoIP services would attract six million SOHO and SME users in Australia by 2011, according to research conducted by Market Clarity.

The telecommunications researcher said there are currently 411,000 users of SME VoIP services as of December 2005, but fewer than 97,000 are subscribing to "paid services" in Australia.

The Market Clarity research found users would continue to favour free services, with paid VoIP offerings attracting only 2.8 million of the 6 million users by 2011.

Shara Evans, CEO of Market Clarity said low average revenue-per-user for VoIP users, indicate VoIP take-up is growing strongly in the consumer/SME space, providers are finding it difficult to convert subscribers into spenders.

She said: “As a result, by 2011 Internet-based VoIP services in Australia will grow to around $680 million out of a telecommunications market already worth more than $30 billion.”

Tony Warhurst, director of Zultys - an IP telephony equipment provider - agrees with the report's figures on the growth of VoIP services, but disputed Evan’s claims SMEs only want to use free VoIP services.

Warhurst said consumers are using free services like Skype and Firefly. However these consumers usually migrate to a similar functionality into their business after using these free services.

“You can’t run a business over a free Skype services. You can’t transfer calls internally and it doesn’t have the functionality SOHOs and SMEs need,” said Warhurst.

Evans also expects a “network effect” to inhibit revenue growth in the consumer and SME VoIP services industry.

“Much of the VoIP industry’s revenue depends on customers wanting to place calls to PSTN numbers,” Evans said.

“As the population of VoIP users grows, a growing proportion of their calls will stay on-network. VoIP providers will need to seek new sources of service revenue if the industry is to thrive.”

The report also found the prospects are better for the growing non-Internet Hosted IP Telephony market (also described as “hosted voice” or “IP centrex”).

Currently worth $59.49 million, by 2011 the hosted IP Telephony market will connect around 520,000 business handsets and generate revenue of more than $993 million annually.

“As PABX and SME key telephone systems ages, Hosted IP Telephony providers will have the opportunity to present next-generation IP-based solutions to customers,” Evans said.

The report by Market Clarity also shows this segment, which already claims more than 62 per cent of Hosted IPT service ends (handsets), will remain the largest base of hosted IP Telephony customers through 2011.

However, Warhurst felt IP centrex services are not as popular as the report claimed.

“I haven’t seen a huge uptake of IP centrex customers. This is basically when a customer of IP telephony signs up with a carrier and the core network backend is kept with the carrier, who provides users with handsets.

"Our SMB customers are connecting with Engin, because they want to be able to keep control of their core network,” said Warhurst.

He believes judging how the service is doing by the number of handsets misleads users.

“IP Centrex services cannot be evaluated on the number of handsets consumers and SMEs use. We actually have deployments where we supply 2800 handsets for one deployment.

"Essentially you could have three clients ordering up to 10,000 each. Handsets aren’t classed as sales points, that’s what IP Centrex service providers do just supply handsets to a customer then provide them with phone calls over an IP, the customer has no control over the network,” he said.