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VoIP Market To Hit $4 Billion By 2010: Report

Phenomenal growth will be driven by the pervasiveness of broadband Internet access and the availability of low-cost VoIP services.

The North American voice over IP (VoIP) is on the brink of a phenomenal growth spurt over the next six years, driven by the pervasiveness of broadband Internet access and the availability of low-cost VoIP services, according to Frost & Sulllivan.

According to the firm's newly-released North American Residential VoIP Markets report, the consumer VoIP market revenues will reach $4.07 billion in 2010, up more than 1300% over $295.1 million last year. Moreover, Frost & Sulllivan expects the entry of non-traditional telecommunications companies, including cable operators, Internet service provider (ISP), and non-telecom companies into the voice market to drive the number of North American VoIP lines up to 18 million from 1.5 million in the same period.

Not surprisingly, incumbent local exchange carriers (ILECs) tend to view VoIP as a threat to their market share and revenue. According to Frost & Sullivan, ILECs have lost 15 million access lines to their non-traditional competitors, though many of these were data lines and second residential lines.

"Residential subscribers are likely to replace second lines with wireless or VoIP; the benefits of VoIP include lower cost, additional features and ease of use," Frost & Sullivan Senior Analyst Lynda Starr said in a statement. "If an ILEC offers VoIP, it risks cannibalizing traditional revenue but also opens up new revenue streams."

According to the firm, mass-market customers are attracted more to quality of service and real features, rather than the promise of new technology. The initial attraction will be cost-savings, but Frost & Sullivan notes that the wealth of new telephony and media features and the delivery of consistent E-911 service will ensure VoIP's success.

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