The market for VOIP (voice over Internet protocol) services in Asia, including Japan, is expected to grow at rate of around US$1 billion per year between 2005 and 2009 to more than US$10 billion, as the number of users more than doubles, according to market researcher In-Stat.
At the end of 2004, VOIP services revenue in Asia totaled US$5.5 billion, with 8.7 million local VOIP lines. Service providers have been leading the VOIP charge in Asia through offering customers discount mobile phone or home rates on long distance calls that are transferred to the IP network, according to Victor Liu, an In-Stat researcher based in Singapore.
That’s why VOIP revenue for long distance calling has outpaced local VOIP calls by a huge margin, with 85.4 per cent of all revenue from long distance and the remainder for local calls, according to In-Stat. In Japan, South Korea, Hong Kong and Singapore, a large portion of long distance calls have already migrated to the IP network.
The adoption of local VOIP services has been slower mainly due to regulatory barriers in many countries where dominant telecommunication companies protect their home turf, said Liu. Phone service providers in many markets want to maintain control over their territory with existing lines so they can still charge customers for routing calls onto the IP network.
“Most of the local VOIP subscriber lines are in Japan and South Korea,” Liu said, adding that many other markets are not as developed.
In China, for example, telecommunications companies moved to block software services such as Skype Technologies SA’s SkypeOut, to protect their long distance revenue. Under current regulations in China, PC-to-phone services are strictly regulated and only China Telecommunications Corp. (China Telecom) and China Network Communications Group Corp. (China Netcom) are permitted to carry out some trials on a very limited basis.
“In China, there is no incentive for service providers to allow rival VOIP services, so the market’s not going to grow very rapidly,” he said.
In-Stat forecasts the number of VOIP users in Asia will rise to over 20 million by 2009.