U.S. makes VoIP strides, but Europe is taking the lead

U.S. makes VoIP strides, but Europe is taking the lead

European incumbents, competitors drive new growth

by Sean Buckley

Mon, September 10. 2007



Despite some slowdowns with the closing of competitive VoIP providers such as Sunrocket (ceased operations earlier this summer) and the troubles of Vonage, the U.S. residential VoIP market continues to be a vibrant sector of growth.


While it’s true that the troubles of competitive VoIP providers have slowed down the growth of US VoIP, the cable operator’s voice drive has leveled out that trend.

According to Telegeography’s US VoIP Research Service, the number of U.S. consumers rose from 6.5 million in mid-2006 to 11.8 million by Q2 2007. (See Figure 1.)

By 2011, TeleGeography predicts that the number of U.S. VoIP subscribers will climb to 23.3 million, a factor that will driven mainly by the cable operator’s aggressive deployment of IP telephony services. Evidence of the growth in cable telephony is being seen not only on the retail side, but also the wholesale market side. Level 3, for example, which sells both traditional fiber connections and VoIP services to cable operators, is seeing this first hand.

“Cable today is the fastest growing wholesale segment that we serve,” said Sureel Choksi, President, Wholesale Markets for Level 3. “That growth is driven by growing backbone data requirements to support high- speed Internet and video and also driven by growth in VoIP and traditional voice.”


Europe takes charge
Despite the vibrant VoIP market that exists in the U.S., it pales in comparison to the growth that’s being seen in the European market. In recent years, the Europe and U.S. markets were seeing similar growth patterns, but then in 2006 the two markets began to splinter apart. There are many factors that are contributing to Europe’s lead over the U.S. in the VoIP race.

In addition to stronger activity from incumbent service providers (France Telecom, Deutsche Telekom and BT), open access to incumbent local loops, aggressive competition and pricing have lead to Europe’s aggressive VoIP growth.

What’s more, TeleGeography says that while European incumbent providers account for 26 percent of VoIP subscribers, U.S. incumbent carriers (AT&T, Verizon and Qwest) have not made as big of a push into the residential VoIP market.

TeleGeography predicts if these above trends continue by 2011, European VoIP penetration will be twice what it will be in the U.S.

“VoIP service in the U.S. has emerged as a mainstream service that is causing traditional services providers some headaches,” Stephan Beckert, TeleGeogrpahy analyst, said. “However, in Europe, VoIP could fundamentally change the structure of the fixed-line market.”

Bridging TDM-to-IP
Those headaches that Beckert and other analysts are referring will likely be abated by new platforms from Tekelec that effectively enable a serviced provider to offer new multimedia services now, but provide a path for service providers to migrate to an IMS architecture on their own terms.

As service providers migrate to an IP and ultimately an IMS-based network architecture, there will be an ongoing need to support services in the legacy and IP and IMS domain.

Tekelec’s TekCore SIP Signaling Router (SSR), for one, allows a service provider to provide unified signaling over the TDM, 2G/3G, and ultimately the IMS network.

By implementing a unified core signaling in their next-gen network, the SSR can enable service providers to use their softswitches to better support session management for multimedia SIP endpoints. (see: Tekelec bridges the TDM-to-IP divide)

These platforms address what Venture Development Corporation says are responses to the reality of the fact that there will be hybrid TDM/IP networks will exist for years to come.

“Whole network change-outs of TDM to IP are likely to be the exception—not the rule,” says the VDC study.