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U.S. Residential Voice Services - Is Voice Still the Killer App?
Frost & Sullivan, March 2007, Pages: 69
This Frost & Sullivan research service titled U.S Residential Voice Services Market: Is Voice Still the Killer App? provides an overview of key trends in the consumer voice services market as well as a detailed revenue/demand analysis of various market segments. In addition, the study identifies the key market drivers and industry challenges, and discusses current and emerging trends. In this research service, Frost & Sullivan's expert analysts thoroughly examine the following markets: wireline local voice, domestic LD voice, international LD voice services, residential VoIP services, and converged wireline-wireless voice services.
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Market Overview
Voice Services will Remain a Core Component of a Comprehensive Consumer Communication Service Bundle in the Foreseeable Future
There is a widespread misconception that voice services in the United States are a declining market with low growth potential. While this is definitely a mature market in comparison to emerging markets such as broadband Internet or wireless data applications, the importance that voice communication plays in human interaction will ensure continued demand for voice services. 'Despite revolutionary changes in communication services and growth opportunities in new areas such as video and broadband, the fact that traditional voice services still contribute over $50.0 billion in annual revenues cannot be ignored,' remarks the analyst of this research service. 'Voice service providers including telecommunication companies and cable MSOs will continue to package wireline voice services along with broadband access and emerging broadband voice/data applications.'
Nevertheless, it is a well-established fact that voice services are steadily transitioning from traditional networks and technologies to new IP-based technologies. This is not likely to happen overnight nor will PSTN access lines completely disappear in the next five to ten years. IP telephony providers still face numerous challenges such as E911 issues, regulatory issues, consistency in quality of calls, and consumer perceptions. However, the voice services market will definitely see a change in the way these services are sold to consumers as new business models, marketing strategies, and pricing schemes evolve.
Migration from Switched Access to VoIP Lines to Define Future Course of Market
The migration of voice minutes and revenues from switched access lines to VoIP lines is one of the key trends impacting the U.S. residential voice services market. In 2006, there were 8.6 million VoIP subscribers in the United States, generating over $2.2 billion in service revenues and their numbers are expected to rapidly increase over the next five to seven years as broadband penetration rises and IP-based voice, data, and entertainment applications gain in popularity. In comparison, there are over 100.0 million residential switched access lines, with incumbent telcos supporting an overwhelming majority of switched voice customers. Cable MSOs and others have started offering voice relatively recently to their subscribers, and these are primarily IP telephony services.
'While there is an inevitable migration from circuit-switched to VoIP access lines, this is a gradual process,' says the analyst. 'For the foreseeable future, service providers, particularly telcos, need to manage both switched and IP voice customers.' Other major trends such as industry consolidation and shifts in pricing strategies are equally pervasive. Federal and state regulators are increasingly realizing the changing competitive dynamics and giving incumbent participants more freedom to price and bundle voice services with emerging services.
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