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
Source: Point Topic Ltd.

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

issey 12/5/2012 | 12:58:44 AM
re: Japan Dominates VOIP Over DSL The reaearch paper probbaly also missed out at least 1 million Fusuion Communications VoIP subscribers..
issey 12/5/2012 | 12:59:34 AM
re: Japan Dominates VOIP Over DSL I cannot say anything more than I have unless it is vague.
SB YBB is one big provider and thus have control of their big national network.

QOS between YBB sub <---> YBB sub. can be guranteed.

QOS between YBB sub <----> PSTN. can be guranteed.

QOS between YBB sub <----> xxx sub on another provider using 050-xxxxx number, can be guranteed depending on their agreements, but should be OK.
flipper 12/5/2012 | 12:59:38 AM
re: Japan Dominates VOIP Over DSL Thanks.
In the market segment that I operate, the 64 up/ 256 down is the most preffered access rate for the SME. Hence my concern about QoS, congestion etc. In the small bit of testing I have performed a file transfer can severly impact a call at these speeds, rendering it unacceptable for business.
I appreciate the background on Y!BB.
flipper 12/5/2012 | 12:59:38 AM
re: Japan Dominates VOIP Over DSL Issey,
I thought I was a techie.
The Internet and its associated providers are not required to implement any TOS / dscp honouring schemes that will provide prioritisation for traffic transitting their systems or egressing interfaces. The Internet is best effort. My understanding is that the bulk of Internet interfaces are FIFO.

Unless the provider who administers the local access (as this is a likely point of congestion) applies QoS techniques then the downstream can still be congested by aggressive applications. The same can be said of file transfers upstream (common for SME's) unless all traffic must transit the SIP adapter and be policed/queued there.
My question does not relate to the ability of the SIP adapter being able to support TOS, more to how can any provider offer a business grade service, when they can not control what traffic may be destined for the end users LAN segment nor gaurentee delivery or priority on the Internet.
Do you know how this is done for business customers of Softbank(YBB)?
issey 12/5/2012 | 12:59:44 AM
re: Japan Dominates VOIP Over DSL Are you guys techies or not ?

Of course there is QOS, the Trio Modem prioritises the VoIP packets ahead of data as well as actually marking the TOS bits for in those voice packets, so that once it hits the diffserv domain, the Ciscos are able to handle it.
nbsherid 12/5/2012 | 12:59:50 AM
re: Japan Dominates VOIP Over DSL > Any one with experience in VOIP over DSL for business able to define the impacts to the quality of the call when the DSL service is also being used for business Internet transactions. Particularly file transfer and web.
I am concerned that it would be impacted due to lack of QoS.

But at 6-8 Mbps wouldn't the effect of that interference be significantly reduced, compared to say 256-512 kbps? It would only be very demanding FTP sessions that might affect it. The contention would be most affected at the access, but the access pipe is probably enough for most people anyway.

Y!BB has been successful because of a very clear value proposition but it has primarily focussed on reducing costs significantly to attract market share rather than other factors. At one third the price of dial-up services, with mostly free P2P calls and cheap worldwide rates, most people (tech and non-tech) would see that it is saving them bundles of money. And free P2P calls would help to promote word-of-mouth and "sign up your friends" marketing.
flipper 12/5/2012 | 12:59:55 AM
re: Japan Dominates VOIP Over DSL Any one with experience in VOIP over DSL for business able to define the impacts to the quality of the call when the DSL service is also being used for business Internet transactions. Particularly file transfer and web.
I am concerned that it would be impacted due to lack of QoS.
issey 12/5/2012 | 12:59:55 AM
re: Japan Dominates VOIP Over DSL Nothing I have said so is confidential or proprietry, so I will intend to keep it that way. One final point is that Softbank were willing to plough money into its YBB project. It has been nearly 5 years and SBB has been losing money for those years, but the losses have narrowed over time and soon it would be negligable. They actually broke operating even at around 2.5 million subscribers. They are also majors Shareholders Of Yahoo Japan. You will notice that the earnings of Yahoo Japan have been rising dramtically for the past 4 years.. thus their share prices, bit of a financial fudging as they say, put costs onto SBB but earning/profit into Yahho Japan. Also SB have many investments they are full of cash it seems. SO I hope people get to see the picture, it is not all Governnment involvment and NTT opening up their loines, it is also SBs aggressive visions & plans and super marketing..
issey 12/5/2012 | 1:00:10 AM
re: Japan Dominates VOIP Over DSL Even though people have a POTS service, the key to VoIP being successful, is because it costs very little to add VOIP to the TRIO DSL modem, and calls are free within YBB network which covers all of Japan..
Competition in Japan is very intense in Japan.. between all providers..
050-xxxx numbers are now alloocated to VoIP services..
The figures from Point do not include NTTs own VoIP services... so I would put the figure near 5 milion for Japan..
issey 12/5/2012 | 1:00:10 AM
re: Japan Dominates VOIP Over DSL jonathanrichardson...
Actually the POTs argument is not an argument at all. Nearly all DSL connections in Japan are on Type 1 line, that is you get a POTs service from NTT too.. Type 2 is the dry copper type. With new competition, SBB will connect that type 2 line to Japan Tel Switch, maybe through a NG DLC from UTstarcom!
issey 12/5/2012 | 1:00:10 AM
re: Japan Dominates VOIP Over DSL Well, even tough POTS is still a monopoly at this moment, DSL is not.. Just look at YBB.. BTW. POTs monopoly is ending..
NTT around 5 years ago, NTT agreed to unbundle their copper for BB etc.. the rest is now history as they say.. However, they overlooked a clause which means that now Softbank (YBB) through its acquisition of Japan Telecom can connect the copper to it switching systems instead of NTTs. The same for KDDI too.
Also NTT will phase out the desposit system because they will lose market share big time if they don't.
jonathanrichardson 12/5/2012 | 1:00:13 AM
re: Japan Dominates VOIP Over DSL In Japan POTS is still a monopoly like AT&T was prior to 1984. Prices set by the government are higher than in the U.S., and to establish service every customer has to pay a deposit equivelant to hundreds of dollars which is held for the entire length of service.
issey 12/5/2012 | 1:00:15 AM
re: Japan Dominates VOIP Over DSL Where do you get your data from, whether they are ordered mostly by young singles & couples ?
Around 4 years ago when Broadband DSL started, peak traffic was from around midnight to around 2am. Over the past 4 years peak traffic has been gradually shifting to the left i.e. earlier now it is clearly around 11pm. Japan now has well over 10 million DSL subs, what does this show, as penetration further increases, it will show a more unified sample of usage behaviour, and not be dominated by ealier adoptors such as geeks etc..
Anyway I am sure demographic breakdowns are available if you ask Softbank & NTT nicely !
paolo.franzoi 12/5/2012 | 1:00:17 AM
re: Japan Dominates VOIP Over DSL
First off the article is about Japan, where only broadband connections are being ordered by most young singles and couples. So, the offering of VoIP is an upsell.

Second, to upset rj....if they deploy DSLAMs without POTS then theoretically the RBOC can avoid UNE-L just like they can by providing deep fiber (For greenfields only).

The actual competition is voice over cable..with its promise to disconnect primary voice lines. VoIP over DSL is a good counter to that (no need to deploy POTS equipment for these installations).

rjmcmahon 12/5/2012 | 1:00:19 AM
re: Japan Dominates VOIP Over DSL VoIP cost savings can be used to defray part of that DSL price tag.

Typically, the local phone company forces a consumer to buy a DS0 with their DSL. Therefore both DSL and the first DS0 are sunk costs. Line number two is typically a cell phone (or one per family member). Line 3 and above is probably the remaining market for VoIP. My guess - not many residences need more than one landline, the promised features such as unified messages don't really close the deal for the average consumer, and the RBOC bundling of DS0/features prohibits real competition via VoIP in the residential local loop.

It seems like a small business that buys a small PBX/key systems would take advantage of VoIP. What are the market penetration numbers there?
materialgirl 12/5/2012 | 1:00:21 AM
re: Japan Dominates VOIP Over DSL In this situation, it appears that the broadband connection is a sunk cost, since the user has one already. VoIP cost savings can be used to defray part of that DSL price tag.

Using VoIP as a poor man's POTS misses the point, doesn't it? What about add-on possibilities like presence or unified messaging?
rjmcmahon 12/5/2012 | 1:00:21 AM
re: Japan Dominates VOIP Over DSL Do these numbers include the cost of the broadband connection itself?

Also, a residential cost analysis should probably assume the consumer has a cellular phone with x minutes of free LD. I've noticed my extended family members have switched over to cellular networks almost entirely for LD calls. They all have DSL/Cable MODEM for always-on and shared internet access. Unfortunately, none have taken an interest in VoIP to date.
cuttyhunk 12/5/2012 | 1:00:22 AM
re: Japan Dominates VOIP Over DSL Do these numbers include the cost of the broadband connection itself?
lastmile 12/5/2012 | 1:00:23 AM
re: Japan Dominates VOIP Over DSL I am here to help.
The difference in cost between POTS and VOIP (for unlimited local and ld) is approximately $15/M. If you add junk fees like taxes the difference is $20.86. This figure multiplied by 12 equals $250.32/year.
Even though VOIP is a less reliable link, saving money the driver.
Ever since people got used to cellular quality no one cares about the better voice quality that POTS offers. VOIP quality is a wee bit better than cell phones.
Ask a local business and they would prefer VOIP because the savings are even greater.
You do not need to redo your home infrastructure for VOIP. Every new cordless system needs just one jack for multiple phones.
I am using a VOIP provider for my home and surprisingly "everyone" is happy.

particle_man 12/5/2012 | 1:00:24 AM
re: Japan Dominates VOIP Over DSL I have a single wire coming into my house which carries both DSL and high quality voice traffic.
Why would I care whether my voice uplink is carried over IP? And why would I redo my home infrastructure so that it connects through a less reliable link?

Is saving money the driver, or is there something else? Phone service already seems pretty cheap (maybe not in Japan). Maybe tax savings? How much are we talking about in savings here?
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