Japan Dominates VOIP Over DSL

VOIP over broadband may be hot, but there are only 5 million users globally and they're nearly all in Japan!

December 8, 2004

3 Min Read
Japan Dominates VOIP Over DSL

Voice-over-broadband services may be one of the hottest topics in telecom right now, but according to specialist research firm Point Topic Ltd., there are just 5 million people in the whole world signed up to such services (see Report: Yahoo Japan Dominates VOIP).

And most of them are in Japan, courtesy of Softbank's Yahoo Broadband service. At the end of June 2004, more than 4 million Yahoo Broadband customers, about 94 percent of its total DSL base, were using its packetized voice service.

That's in stark contrast to nearly all the other 1,000 or so voice-over-broadband service providers, which, according to Point Topic, have hardly any customers.

So, other than Yahoo Broadband, which operators have notched up some early gains? The table below shows that three of the other top five players are in Europe -- Sweden's Bredbandsbolaget AB (B2), France's Free, and Italy's FastWeb SpA -- with only Vonage Holdings Corp. and Cablevision Systems Corp. (NYSE: CVC) flying the flag for North America.

Table 1: 2Q04 Subscriber Numbers for Six Leading VOIP Operators

Operator

Subscriber numbers

Date

B2 (Sweden)

50,000

July 2004

Cablevision (USA)

115,050

June 30, 2004

FastWeb (Italy)

300,000

September 2004

Free (France)

330,000

June 30, 2004

Vonage (USA)

200,000

July 2004

Yahoo Broadband (Japan)

4,038,000

June 30, 2004

Total

5,033,050





But what about Korea? Despite having the greatest broadband penetration rates in the world (nearly 30 percent of all households), and some outrageous access speeds (some up to 100 Mbit/s), it seems that voice over broadband is not in evidence. Yet.

Point Topic's John Bosnell says market regulation has held back Korea's voice-over-broadband market to date, but with the country's regulator recently announcing a VOIP numbering scheme, it seems poised to take off. In addition, the current lack of flat-rate telephony tariffs make Korea "an attractive market for VOIP providers. I would certainly expect to see some Korean operators included the next time we do this list."

Elsewhere, Bosnell expects to see further growth in the U.S. as the major cable operators and traditional carriers build on their current VOIP offerings, while he expects Vonage to continue expanding its customer base.

He also expects Free, a growing thorn in France Telecom SA's (NYSE: FTE) side, to continue its impressive growth (see Iliad Ramps Up Broadband to the Homer). Bosnell says voice over broadband has been driven by "operators that have embraced local loop unbundling, and priced their services very low. If their prices are sustainable, then France should also see good growth in 2005."

Free's success has come from offering VOIP as part of a triple-play package, along with video and Internet access, and it's as part of those sorts of bundles that Bosnell sees the service taking off, especially as it becomes easier and cheaper for service providers to add packetized voice capabilities to their existing systems.

He warns, though, that not every country offers the right conditions for growth. Each national market "has different regulation, historical telephony tariffs, and other factors that can mean the difference between VOIP being a roaring consumer success and being a niche product for enthusiasts or very heavy telephone users."

— Ray Le Maistre, International News Editor, Light Reading

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