IDC Expects 27 Million Subscribers to U.S. Residential VOIP Services by 2009

FRAMINGHAM, MA – APRIL 4, 2005 – Residential voice over Internet Protocol (VOIP) has clearly come into its own in the U.S. as major telecommunications carriers begin to roll out VOIP service offerings to give themselves a competitive edge. Fueled in part by consumers looking to add value to their telephony service, IDC expects that the number of U.S. subscribers to residential VOIP services will grow from 3 million in 2005 to 27 million by the end of 2009.

Although it has been slow to develop in the U.S. and elsewhere, VOIP is finally beginning to show its potential in the consumer market. Much of the recent success is the result of marketing VOIP services on the basis of price. However, carriers will need to educate residential users on the features and functions of VOIP service to avoid a pricing war. Integrating applications and enabling convergence are critical capabilities that carriers will need to offer in the years ahead.

"VOIP must prove that it is more than just a cheap replacement for POTs service," said William Stofega, senior analyst in IDC's VOIP Services Research program. "To do this, carriers will need to offer services that are compelling and affordable. The winners will use the flexibility of IP to design services that differentiate themselves from their competitors. However, it is important to remember that the market for VOIP services is still in the very early stages of development and carriers and equipment vendors need to plan for a marathon."

Although the market is already crowded with traditional and next generation carriers, IDC believes that even more service providers, including cable MSOs, will launch consumer VOIP products and services in 2005.

The IDC study, U.S. Residential VOIP Services 2005-2009 Forecast and Analysis: Miles to Go Before We Sleep (IDC #32991), examines the current state of residential VOIP as delivered over a broadband connection, its prospects for future growth, and how that growth will find specific and viable expression in the current telecom market for U.S. consumers. The report includes a five-year forecast for VOIP residential services, and a summary of the current consumer VOIP service offerings from leading providers.

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