VoIP could shatter US telecoms

VoIP will grow so fast that it will disrupt the US telecoms system and cause a fragmentation of supply and services according to a US analyst's report.

The report by research firm Analysys gives a more apocalyptic echo of Peter Cochrane's article on the subject yesterday on silicon.com.

Analysys states that: "The rapid growth of Voice over IP (VoIP) service in the USA represents a turning point in the development of the US telecoms market."

The research company predicts that, by 2008, VoIP will be used by 17 per cent of broadband households in the US - 11.7 million - and 23 per cent, or 800,000, of the broadband enabled small businesses.

And big businesses will be pushing even harder with a 50 per cent compound growth rate to hit 18 million VoIP enabled lines.

This will all generate about $5.7bn in revenue, which sounds like a lot but doesn't stand up to the total US telecoms revenue of $224bn a year.

Michael Kende, Analysys principal consultant, said: "It has the potential to shift market power to the end user and new service providers, to disrupt the balance of universal service subsidies and redefine the basis of the US telecoms industry and its regulatory structure."

For the US regulator, the FCC (Federal Communications Commission) faces a massive headache. As in most countries, the regulated charging structure is modified to take into account an obligation to provide a service available to everyone – and to particularly cater for the needs of emergency services.

Kende summarises the regulatory dilemma. "Unsurprisingly, with the historical US voice business model potentially facing a sudden collapse, the FCC has placed VoIP at the top of the agenda.

"But it is a difficult call for the FCC, caught as it is between its interest in promoting competition and innovation and the need to serve the public interest."