JUPITERRESEARCH FORECASTS VOICE OVER IP TELEPHONY SERVICES TO REACH 12.1 MILLION U.S. HOUSEHOLDS BY 2009
(New York, NY - October 7, 2004) -- JupiterResearch, a division of Jupitermedia Corporation (Nasdaq: JUPM), today announced in its recently released report, "Broadband Telephony: Leveraging Voice Over IP to Facilitate Competitive Voice Services," that it forecasts that VoIP telephony services will grow to about 400,000 U.S. households by the end of 2004, and to 12.1 million households by 2009, representing about 10% of all U.S. households. Additionally 17% of all U.S. broadband households will use a VoIP telephony service in 2009, up from only 1% by the end of 2004.
While this is extremely strong growth, JupiterResearch believes that VoIP service providers face two key challenges. The traditional carriers have a strong, well-established customer base and wireless telephony has been adopted by the younger generation. Current consumer telephony preferences will create challenges for VoIP start-ups establishing themselves in the market.
The traditional carriers have unmatched brand strength and marketing clout due to their existing customer base. Broadband consumers evaluating landline telephony rank quality and reliability over price and features; and bundled services are growing steadily as purchase motivators. Moreover, demand for landline VoIP service is not very price elastic: while about one-third of online consumers rated themselves somewhat or very likely to turn to VoIP at $39.99/month, demand increased only 10% in response to a 38% decrease in price. According to JupiterResearch senior analyst Joe Laszlo, "Just like we saw with DSL five years ago, VoIP start-ups will be extremely important in jump-starting the market, and will motivate established carriers to develop their own VoIP services. However, it is unlikely that start-up VoIP providers will become a significant threat to the incumbent phone companies."
The JupiterResearch report includes an analysis of consumer market segments based on their likely interest in the VoIP value proposition. Younger consumers pose a particular challenge for VoIP service providers. While 18 to 24 year olds were least likely to turn to traditional carriers for service, they were also least likely to use landline telephony at all. Indeed, 12% of 18 to 24 year olds already say their wireless phone is their only phone. "For attracting young adults, VoIP's biggest competitor may prove to be mobile operators, not the Bell companies," continued Laszlo. JupiterResearch recommends that VoIP providers design service plans for consumers seeking only a low-use back up to their mobile service.
The complete findings of this report are immediately available to JupiterResearch clients online. For more information on the report or JupiterResearch's Broadband research service please contact Kieran Kelly, Vice President of Global Sales and Client Service at 1-800-481-1212 or [email protected].
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