VOIP Finds Home in Eastern Europe

More and more service providers in Central and Eastern Europe are pushing VOIP to their customers as broadband uptake grows

February 1, 2006

3 Min Read
VOIP Finds Home in Eastern Europe

VOIP is now a mainstream telecom service in Central and Eastern Europe following a raft of deployments by service providers in the region, with IP telephony system vendors Cirpack and NetCentrex SA the main beneficiaries.

Softswitch maker Cirpack, now part of Thomson S.A. (NYSE: TMS; Euronext Paris: 18453), has just announced two new deployments, in Croatia and Slovenia, to add to the tranche of Eastern European customers it revealed last November. Its VOIP systems are being used for a range of services, including residential voice over broadband and IP Centrex for business users. (See SiOL.net Uses Cirpack for VOIP, Cirpack Wins in Croatia, Cirpack Touts Deals, and Thomson Buys Cirpack.)

Cirpack rival NetCentrex has also made significant inroads in the region, having signed up 10 new customers and six partners during the past year, including two new customers in Slovenia. (See NetCentrex Touts Euro Uptake, NetCentrex Wins in Slovenia, and Voljatel Uses NetCentrex.)

Other VOIP system vendors have also registered success there, including Italtel SpA in Poland, Verso Technologies Inc. (Nasdaq: VRSO) in Slovenia, and Sonus Networks Inc. (Nasdaq: SONS) with T-Systems International GmbH and Interoute Communications Ltd. (See Italtel Shows Off, TP Picks Italtel, Cisco for VOIP, Slovenians Use Verso for VOIP, Sonus Lands T-Systems Deal, and Interoute Expands With Sonus.)

The uptick comes as the region's telecom infrastructure undergoes a massive transformation, with service providers, keen to take advantage of the region's growing wealth, making the leap from ageing TDM infrastructure to the latest IP-based systems, a trend that was predicted in a Light Reading Insider report in August 2004. (See LR Insider Analyzes Eastern European Telecom Market.)

That transformation, coupled with increasing levels of disposable income, is resulting in growing demand for broadband services in particular. And while the region currently has only about 3.8 million broadband subscribers, according to the latest statistics from Point Topic Ltd. , it is one of the world's fastest growing regions in terms of new subscriber uptake.

According to the research firm, the Czech Republic , Bulgaria, and Slovakia are showing particularly strong growth, while most countries grew faster than the world average. Earlier this month Czech incumbent Cesky Telecom a.s. said its DSL customer base had grown by 175 percent in 2005 to 275,000 subscribers. (See Cesky Updates on Broadband.)

All of which is leading to an explosion in VOIP traffic volumes, with IDC predicting that the number of VOIP minutes in the region in 2005 will be five times greater than in 2004, and will triple in 2006 on a year-on-year basis. The research firm believes the greatest initial uptake is coming from business users that see VOIP as a way to cut their voice bills. (See IDC Reports on Euro VOIP.)

The increasing demand for broadband and VOIP is set to continue as the European Union's new members -- Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and Slovenia -- develop their economies, and neighbors such as Bulgaria and Romania ramp up their telecom capabilities ahead of their expected acceptance into the EU in 2007. Others hoping to join the EU, and so transforming their IT economies, include Albania, Bosnia and Herzegovina, Croatia, the Former Yugoslav Republic of Macedonia, and Serbia and Montenegro.

Details of the Eastern European deployments comes as Western European carriers find themselves resigned to the impact of widespread VOIP usage, with Orange (NYSE: FTE) citing greater-than-expected VOIP uptake as a major factor affecting its revenue outlook, and Dutch incumbent KPN Telecom NV (NYSE: KPN) announcing the nationwide launch today of its own IP telephony service, InternetPlusBellen. (See France Telecom Gives CFO Le Boot and KPN Goes National With VOIP.)

— Ray Le Maistre, International News Editor, Light Reading

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