While the stock performance does not provide a clear view regarding the future potential for long-term growth of the VoIP industry, one factor that does indicate growth potential for VoIP within the Telecom market is how quickly phone companies are providing DSL broadband services to customers in order to offer advanced services due advances in digital voice transmission technology.
Digital Offerings By Phone Company
NECA, a non-profit organization for local phone companies in rural communities, provided a 2006 report titled “Trends 2006: Making Progress with Broadband”, which outlined the tremendous growth rate of the number of rural phone companies offering these DSL services to customers within NECA’s TS pool members. The chart of pool members providing DSL service is shown here.
According to the NECA report, there were 151 companies offering 20,000 DSL lines in 1999. By 2006, there were 1044 companies offering 630,000 ADSL and SDSL lines.
VoIP And Broadband Companies
Since both broadband services can deliver VoIP technology to customers, the industry is in a state of intense competition and maneuvering. The earliest technology was established by Internet service providers, which were initially small dial-up service companies. Internet service and early VoIP products and services were delivered over the phone lines, as Internet customers dialed into their Internet Service Provider’s modem bank.
As Internet technology advancements migrated to high-speed broadband services, Cable companies entered the Internet market with broadband Internet service delivered through their existing cable infrastructure. Phone companies established a broadband Internet product for customers through DSL technology using the phone lines. Along the way, VoIP products and services advanced, regardless of which route they were delivered to customers. As long as the user could log onto the Internet, VoIP products and services would work.
Spending Habits Of VoIP Customers
Because of this competition, spending on VoIP technology for residential customers, enterprise business clients, and Telecom businesses themselves, are all over the map. The dramatic growth of the VoIP industry, as outlined in the first part of this report, is now at a crossroads, where technological advancements and spending habits are influenced by competition to capture a share of not only the VoIP market, but especially a share of the enormous telecom market.
According to a September 2008 article in Enterprise VoIP Planet, large companies are turning to VoIP telecom solutions in larger numbers, due to the easy support and management of digital voice technology. So spending within enterprise customers is continuing to grow. But the report also outlines a surprising downturn in IP investments by “wire-line telecoms,” of products like digital gateways and soft switches. Analysts interviewed in the report believe that telephone companies are looking to invest in areas that will generate more revenue and provide them with a competitive advantage in the telecom market. The article reports that service provider spending on IP technology to convert their traditional TDM networks to VoIP technology is slowing – down 8% in the second quarter of 2008.
Increased VoIP Spending
In general VoIP spending is up. Small business owners and enterprises continue turning from telephone service to digital IP voice service instead. Traditional phone service providers are investing more into products that will capture more Internet customers and increase their revenue, rather than upgrading networks. AT&T and Verizon are both looking to increase DSL broadband speeds with technology like fiber optics.
Interest and spending trends in “innovative VoIP services” continues to rise within small and large businesses, as well as for private residential Internet customers.