Broadband IP Telephony's a Small but Fast Growing Communications Service, Reports In-Stat/MDR

Business Wire, June 1, 2004

Business Editors/High-Tech Writers

SCOTTSDALE, Ariz.--(BUSINESS WIRE)--June 1, 2004

With Vonage adding nearly 20k new lines a month and AT&T's CallVantage promising to have 1 million subscribers by end of 2005, the U.S. Broadband IP Telephony market will have strong growth over the next several years, according to In-Stat/MDR (http://www.instat.com). The high-tech market research firm reports that, while there were only 144k subscribers at the end of 2003, lower service cost and compelling new communications features are driving service adoption.

Broadband IP Telephony provides for voice communications over a broadband connection using Voice over IP (VoIP). The voice traffic can then either be routed over the public Internet or a carrier's private IP backbone. Unlike older VoIP services, Broadband IP Telephony allows for both inbound and outbound voice traffic, and can function as a primary voice line.

"Service providers are attracted to the service not only for its revenue potential, but because it gives them an alternative, local strategy to reselling a Regional Bell Operating Company's (RBOC's) network," said Daryl Schoolar, a senior analyst with In-Stat/MDR. The market, however, isn't without its challenges, chief among them being regulatory uncertainty. According to Schoolar, "Until all of the regulatory issues surrounding Broadband IP Telephony are resolved, potential investors will be weary of putting their money into a service provider that could lose its entire market advantage due to an unfavorable ruling." Other challenges facing this market involve service security and competing forms of voice services.

In-Stat/MDR has also found that:

-- At the end of 2003, Vonage had the largest share of

subscribers, with 66% of the market. The combined efforts of

cable operators had a decent share and other hosted Broadband

IP Telephony providers controlled the rest of the market.

-- Overall, the market for Broadband IP Telephony in the United

States consists mainly of consumer subscribers. While this

service targets primarily consumers, there are some business

service offerings. However, the nature of the service limits

it to only the smallest of offices needing few voice-lines.

-- 10.3% of all broadband subscribers will utilize Broadband IP

Telephony by the end of 2008.

The report, "Hear This: Broadband IP Telephony" (#IN0401336TX), looks at the market for Broadband IP Telephony services. Found in this report are five-year forecasts -- for service subscribers, service revenues, subscribers by provider type and access technology, and market share. To purchase this report, or for more information, please visit: http://www.instat.com/catalog/pcatalogue.asp?id=37 or contact Courtney McEuen at 281-246-4668; cmceuen@reedbusiness.com. The report price is $3,495.

In-Stat/MDR (http://www.instat.com) offers a broad range of information resources and analytical assets to technology vendors, service providers, technology professionals and market specialists worldwide. The company stands alone in its ability to integrate both supply-side and demand-side research methodologies into a single comprehensive view of technology markets and products. This capability relies on a unique ability to cover the entire value chain from engineering-level technology, through equipment, infrastructure, services and end users.

In-Stat/MDR is part of the Reed Electronics Group, a division of Reed Elsevier (www.reedelsevier.com), a world-leading publisher and information provider. With more than 38,000 employees worldwide, Reed Elsevier operates in the science & medical, legal, education and business-to-business industry sectors, providing high value and flexible information solutions to professional end users, with increasing emphasis on the Internet.