VoIP subscriber growth enters the US mainstream

New eMarketer report finds VoIP services are set to take off in 2006

NEW YORK, NY (May 10, 2005) — More telephone services are being offered over the Internet through VoIP (Voice Over Internet protocol) and its steady growth this year will see a spillover into mainstream US residential households and businesses by 2006, according to a new eMarketer report. Currently, the number of US VoIP subscribers is small, with varying estimates predicting between 2.8 million and 6.7 million residential VoIP lines in use by the end of 2005. In five years' time, even the most optimistic forecast predicts just 27.0 million residential VoIP subscribers, accounting for 19.6% of the 137.4 million US consumer and small business wireline subscribers at the end of 2003.

"There is still a long road ahead for consumer and business migration to VoIP," says Steve Butler, eMarketer Senior Analyst and author of the report. "But it is on the verge of moving out of the early adoption phase and into the mainstream. The next two years will mark the turning point when widespread VoIP use finally begins to take off."

eMarketer's new report, VoIP: Spending and Trends, released today, examines the rapidly developing IP telephony market and the impact its growth will have on businesses, consumers and the entire communications industry. As of late last year, several leading VoIP service providers were beginning to see strong VoIP subscription growth. And a wave of new forecasts for the residential VoIP market indicates similar growth. Telecom consultancy Atlantic-ACM estimates that US retail VoIP services revenues will increase by a compound annual growth rate of 64% between 2003 and 2009, reaching $20.4 billion in five years' time. Gartner Group predicts that consumer VoIP services spending will jump from $1.9 billion in 2005 to $9.5 billion in 2008. Butler notes that the explosive growth of broadband Internet access in US households is driving the adoption of higher US residential VoIP usage. eMarketer estimates that 42.3 million homes, or 36.2% of US households, will be using broadband by the end of this year.

VoIP: Spending and Trends aggregates the latest data from leading market researchers - Forrester, Gartner, Halpern Capital, Harris Interactive, IDC, Infonetics Research, Ipsos-Insight, Merrill Lynch, TIA and many others - with eMarketer's objective, unbiased analysis to give you the information you need to make intelligent, ahead-of-the-curve business decisions. Issues & questions included in VoIP: Spending and Trends include:

• How many US consumers are using VoIP today, and how many will begin using it over the next five years?
• What kind of VoIP service providers are consumers most likely to choose?
• How many US companies are using VoIP today, and how many plan to begin adopting it over the next two years?
• How much do businesses expect to spend on VoIP equipment over the next several years?
• What are the greatest barriers to business and consumer adoption of VoIP services today?

For information on purchasing a copy of VoIP: Spending and Trends, visit eMarketer.

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