ISPs Rival Pure Play VoIP Providers Print E-mail
Written by Adam Gosling   
Thursday, 06 July 2006
A new study of the IP telephony market in Australia has revealed that ISPs are making a strong bid to become the providers of VoIP services.

The study, titled "ISPs: The New Vanguard of Retail Voice Services" was carried out by research firm Market Clarity which surveyed 245 companies offering voice services in Australia.

The results showed an increasing percentage of companies are ISPs adding VoIP services to their product offering.

The Market Clarity survey must also dug out a large number of new providers as it reports that the VoIP service provider market is much larger than generally realised. The research identified 169 retail VoIP services and 42 wholesale VoIP services from a total of 182 VoIP service providers.

Of those, more than 28 percent are ISPs. 161 voice providers offer also offer Internet services.

"Analysts and commentators have significantly under-estimated the number of companies entering the VoIP market in the last two years," explained Market Clarity's founder and CEO, Shara Evans. "This study demonstrates a very strong and accelerating adoption of VoIP by ISPs."

Evans says the mushrooming voice offering from ISPs is attributable to the launch of wholesale VoIP services over the past 12 to 18 months.

These whitelable services make the process of implementing and offering VoIP services to consumers a relatively straightforward way to increase ARPU (average revenue per user).

It was interesting that the Market Clarity survey also points to a large percentage of ISPs involved in the regular PSTN market with 37 per cent of companies offering regular phone services are again, ISPs.

"The growing number of ISPs offering voice services suggests that the industry is looking beyond its traditional base of Internet utility services, and is looking to reduce churn by commanding more of their customers' telecommunications spending," said Evans.

"The number of ISPs now known to offer voice services represents more than 29% of the 547 ISPs tracked by Market Clarity," she said.

This may also represent a serious competitive challenge to pure-play VoIP providers, who cannot draw on other revenue streams to cross-subsidise their services.

The report also indicates little crossover between mobile and VoIP providers.  While the sample of 245 providers included 64 companies offering mobile services, there is a relatively low overlap between mobile services and VoIP services.

The fast growth of the VoIP market poses a challenge for regulators, however, with VoIP providers still lagging behind the voice services market in their membership of the mandatory TIO scheme.

Only 60.4 percent of VoIP providers are members of the TIO scheme, the study finds, compared to 86 percent of PSTN providers and 84.4 percent of mobile service providers.

"The TIO is a key plank in telecommunications consumer protection," Evans said. "Providers themselves are also risking a regulatory response by ignoring or resisting their regulatory obligations."

Market Clarity found that there are 61 companies in the sample of 245 whose business activities include reselling carriage services (for example, VoIP service providers offering low-cost PSTN termination) who qualify as "regulatory refuseniks," says Evans.

The 42-page report analyses the activities, services and regulatory status of 245 companies offering voice services in Australia and costs $995 (ex-GST) www.marketclarity.com.au.

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