Study sees tempered growth for IP telephony

Carriers’ large-scale transition to VoIP may not begin in earnest until 2010, although spending on gear for the telephony technology will double over the next five years, according to research company Dell’Oro Group Inc.

Network equipment providers sold US$2.4 billion worth of dedicated VoIP infrastructure products in 2005, a number that will grow to US$4.7 billion by 2010, according to Dell’Oro analyst Steve Raab. The company counted media gateways (devices that translate between packet and circuit-switched networks), softswitches (servers that switch packet-based calls) and products that combine those elements. It did not include VoIP elements built into other products such as multiservice switches.

Competitors to the incumbent telephone companies, such as cable operators and pure VoIP providers like Vonage Holdings Corp., have led the way. VoIP typically is less expensive and lends itself to features such as click-to-dial and unified voice and e-mail messaging. Traditional carriers have rolled out services, but have not marketed them aggressively, Raab says. They would rather keep customers on the existing PSTN in which they have so much already invested.

“They want to have a competitive solution, but they don’t want to push the transition now,” Raab says.

Established carriers are carrying more voice calls as data packets in the core of their networks and will eventually replace their circuit-switching technology with VoIP, but that older equipment has depreciation cycles as long as 30 years, Raab says. “That transition is extremely young right now.”

Entire networks, including customer-facing infrastructure at the edge, may start to get a wholesale retrofit starting around 2010, he says, although many variables may yet affect this picture. Key questions include how many users drop landlines for cell phones and how quickly they adopt the converged fixed-mobile technology, which replaces cell phones and fixed-line phones with a single cellular-WLAN device.

Growth will come from a combination of replacing existing infrastructure and overlaying VoIP on current broadband networks in highly developed countries, along with the use of VoIP to reach new phone users in less developed regions, Raab says.

Dell’Oro reported 48 per cent revenue growth for equipment providers between 2004 and 2005, but forecasts only 25 per cent growth in 2006. Raab says revenue growth may be slowing because of falling prices and the dynamics of a market that’s no longer growing up from almost nothing.

QuickLink: 061952

Would you recommend this article?


Thanks for taking the time to let us know what you think of this article!
We'd love to hear your opinion about this or any other story you read in our publication.

Jim Love, Chief Content Officer, IT World Canada

Featured Download

Featured Articles

Empowering the hybrid workforce: how technology can build a better employee experience

Across the country, employees from organizations of all sizes expect flexibility...

What’s behind the best customer experience: How to make it real for your business

The best customer experience – the kind that builds businesses and...

Overcoming the obstacles to optimized operations

Network-driven optimization is a top priority for many Canadian business leaders...

Thriving amid Canada’s tech talent shortage

With today’s tight labour market, rising customer demands, fast-evolving cyber threats...

Staying protected and compliant in an evolving IT landscape

Canadian businesses have changed remarkably and quickly over the last few...

Related Tech News

Tech Jobs

Our experienced team of journalists and bloggers bring you engaging in-depth interviews, videos and content targeted to IT professionals and line-of-business executives.

Tech Companies Hiring Right Now