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The Voice of the Lightwave: VoIP
How will VoIP Impact the Telecom Industry
Published May 2004
Overview | TOC | TOF
*Print copy included with PDF |
Overview:
VoIP is suddenly the most written about, talked about and hyped subject in the telecommunications world. VoIP equipment accounted for as much as 20% of total enterprise voice equipment in 2003. International long-distance on VoIP is growing at about 35%. However, it still is not selling much. That is to say, there really is not a strong telecom market impact yet. The enterprise sales tend to be replacement sales, not incremental. The long distance market is pretty much the same. In spite of these relatively modest impacts to date, FCC Chairman Powell has seen fit to warn the incumbents (the RBOCs primarily), in a early May 2004 speech , “You ought to be terrified because we are lowering the barriers to offering a service to which you have a dedicated massive infrastructure.”
For VoIP to have a big impact on the telecom marketplace, network VoIP must take on a significant market share of the residential market. (‘Network VoIP’ as it is being used in this report refers to the integration of VoIP with the Public Switched Telephone Network.) Currently, the number of Network VoIP lines is less than 500,000. However, as enumerated in this report, a number of major players including the IXCs, CLECs, cable companies, and RBOCs, are beginning to make major moves in the VoIP area.
The current telecommunications marketplace is characterized by a series of attack/defend situations. Just about all of the major players are in the position of attacking one or more of the other major groups of telecommunications companies (e.g., the CLECs are attacking the RBOCs.) Simultaneously each of the groups is defending its own major markets from a similar attack, often from different directions. VoIP will have a definite role in this series of attack/defend scenarios. Network VoIP will be useful to all groups of players, but it will be most effective for the large CLECs/IXCs (e.g., AT&T or MCI.) It offers them a path to achieve substantial residential market penetration without having to depend on the unstable and expensive UNE-P approach.
Forecasting network VoIP is extremely difficult because it is really in its infancy, and because there are a number of ‘side issues’ that could have major positive of negative impacts. In spite of the difficulty, this report uses a technique of scenario development to come to a most likely forecast for the future of network VoIP. This forecast suggests that by 2010 network VoIP will be serving nearly 20,000,000 households – about 25% of the potential market. (Note that the potential market is defined as those households with high-speed access.) The market value analysis will suggest that the network VoIP market can near a value of one billion dollars by 2010!
The forecast market penetration of network VoIP also suggests major changes in the telecom network. These changes include a move towards IP networks and a move to replace the classical class 5 central offices with soft switches. However, most importantly, as Chairman Powell warns, network VoIP is a significant challenge to the core business of the RBOCs, and it could foreshadow a major reordering of the industry.
Table of Contents:
Table of Contents
Table of Figures
The Lightwave Network Series of Reports
Executive Summary
Introduction
The Competitive Landscape – Thr Threats in Every Direction
RBOCs vs. the CLECs (IXCs)
The RBOC Counterattack – Long Distance
RBOCs vs. Cable Companies
Market Environment
Cable Companies vs. Satellite Companies
Marketplace Impact of VoIP
Strategic Market Aspects
CLECs (IXCs) Attacking the RBOCs
Other CLECs
BroadVoice, Inc
CBeyond Communications
DSL.net
GoBeam, Inc.
Net2Phone
Savvis Network
Vonage
Network Approach for the CLECs
Addition of IXC Capabilities
CLEC/IXC Migration
Cable Companies Attacking the RBOCs
The Role of VoIP with the RBOCs
Summary of the Strategic Positions
Network VoIP Market Forecast
Upper Limit on VoIP
Forecasting Approach
The Forecast
The Scenarios
Scenario I – The Most Pessimistic Scenario
Scenario II – The Second Most Pessimistic.
Scenario III – The Second Most Optimistic.
Scenario IV – The Most Optimistic.
Comparison of Scenarios
Most Likely Outcome
Company Participation in Most Likely Scenario
Telecom Service Market Impact of VoIP
Service Market Participation by Company Type
Infrastructure Analysis
Current Infrastructure
Changes in Infrastructure due to VoIP
Issues with VoIP
Regulation
Security and Safety
Voice Quality
Compression
Delay
Diffserv
MPLS
Compatibility with Existing Applications
Equipment Vendors
Major CarriersÕ Selected Vendors
Vendors Listing
Alcatel
Brooktrout Inc.
Cedar Point Communications
Cisco Systems
EADS Telecom
Efficient Networks
Lucent
Marconi
Multi-Tech Systems, Inc.
NEC
Nortel
Oki Network Technologies
Quintum Technologies
REDCOM Laboratories, Inc.
Sentito
Siemens
Sonus Networks
Sylantro Systems
Syndeo
Telco Systems
Telica, Inc.
Teltronics, Inc.
VocalTec
Zhone Technologies
Appendix I – What's Really wrong at SBC
Table of Figures:
Figure 1, Market Matrix
Figure 2, RBOCs vs. CLECs (IXCs)
Figure 3, RBOCs in Long Distance
Figure 4, RBOCs vs. Cable Companies
Figure 5, High Speed Forecast
Figure 6, Adoption Rates of PCs and High-Speed Access
Figure 7, Cable Companies vs. Satellite Companies
Figure 8, VoIP Threat Matrix
Figure 9, VoIP as an Attack Mechanism
Figure 10, CLEC Implementation of Network VoIP
Figure 11, CLEC/IXC Network VoIP
Figure 12, CLEC/IXC VoIP Network Migration
Figure 13, Home Provisioning
Figure 14, VoIP Threat Matrix - Relative Weights
Figure 15, VoIP as an Attacking Mechanism
Figure 16, Forecast for US Households with H-S Service
Figure 17, Scenario I - hh Growth
Figure 18, Scenario II - hh Growth
Figure 19, Scenario III - hh Growth
Figure 20, Scenario IV - hhs Growth
Figure 21, Comparison of Four Scenarios
Figure 22, Most Likely Scenario
Figure 23, VoIP vs. H-S Access Penetrations
Figure 24, Participation in Most Likely Scenario
Figure 25, Gross Service VoIP Market
Figure 26, Comparison of Net and Gross VoIP Service Markets
Figure 27, VoIP Service Market by Segment
Figure 28, Segments of the VoIP Service Market on a Net Basis
Figure 29, VoIP Infrastructure
Figure 30, VoIP Infrastructure Ownership
Figure 31, Network Traffic Forecast
Figure 32, Evolved VoIP Infrastructure
Figure 33, MPLS Network
Figure 34, Carriers' Selected Equipment Providers
Figure 35, Breakeven Analysis of h-s Sales
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