Global VOIP Traffic Grew 80% in 02

WASHINGTON -- A fierce debate is raging at the FCC over the future of Voice over Internet Protocol (VoIP) telephony. At first glance, the ferocity of the debate seems out of proportion to the reality -- retail VoIP subscribers account for less than 0.2% of US phone lines. However, recent research on the international long-distance market by TeleGeography, a division of PriMetrica, Inc., suggests that VoIP can transform a century-old business in just a few years.

According to _TeleGeography 2004_, VoIP providers carried only 150 million minutes of international telephone calls in 1998, less than 0.2% percent of the world's international traffic. By 2002, cross-border VoIP traffic had grown to just under 19 billion minutes, about 11 percent of the world's international traffic. "While the FCC debates the future of retail VoIP services, millions of consumers already use VoIP to make international calls every day," stated PriMetrica analyst Stephan Beckert.

International VoIP carriers have achieved rapid growth by carrying traffic on behalf of other long-distance service providers. Consequently, most end- users are likely unaware that many of their phone calls are traversing the Internet, rather than traditional long-distance networks.

The two largest VoIP carriers, ITXC and iBasis, each carried more than 2.5 billion minutes of international traffic in 2002, placing them among the largest international operators in the world. "The combination of aging regulations and new technology enabled start-up carriers to capture significant market share in only a few years," noted Beckert.

Table 1: International Long-Distance Market

Millions of mins.	1998	1999	2000	2001	2002	2003 (est)	CAGR
VoIP traffic	150	1,655	5,954	10,147	18,045	24,519	177%
PSTN traffic	93,000	108,000	132,027	146,095	155,165	166,615	12%
Total traffic	93,150	109,655	137,981	156,242	173,210	191,134	15%
VoIP share of traffic	0.2%	1.5%	4.3%	6.5%	10.4%	12.8%
Source: TeleGeography 2004, PriMetrica, Inc.

PriMetrica Inc.