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A new survey from Parks Associates, out this week, shows that US internet households have a firm grasp of Voice over Internet Protocol (VoIP), and they want it now. The survey conducted for Residential Voice-over-IP: Analysis & Forecasts sampled 3,300 US households on VoIP services.

Half of all those households that already have access to the internet, whether it is over an existing broadband line or over a dial-up connection, say they are interested in VoIP telephone services.

This shift in attitudes could deprive current long-distance companies of their most profitable subscribers, and with them aware of that, they have to react sharply to this new trend and get in first and offer these services. So far only US private company Vonage has built any branding around the idea and leads the independents in offering VoIP services.

Its home page screams out the benefits of taking on VoIP from an independent, offering free services such as voicemail, caller ID, call waiting, voice forwarding and transfer, free calls to any Vonage customer anywhere, an area code of your choice, a secondary virtual area code, free three-way conferencing and cheap international calls.

Digital phone services make this all relatively easy to set up, and even free peer to peer services such as Skype, which has had 6 million downloads and which has no central server to fork out for, as it runs its service on peer to peer supernodes, can still manage much of this function.

One US supplier, Gatelinx, plans to go one better than either Skype or Vonage and offer most of the above service, plus video phone function, all using VoIP.

Parks reports that interest in VoIP services is disproportionately high among subscribers with high monthly phone bills, with cost savings as the primary driver.

“Consumers are looking at VoIP service as a replacement for their primary phone line, not as a secondary backup,” said John Barrett, a research analyst at Parks Associates. “VoIP could also serve as a lure for new broadband subscribers, given the strong interest among narrowband households. The market is still searching for a 'killer' broadband application. Wouldn't it be ironic if it turned out to be telephone service?”

Well Faultline believes that there will be multiple killer apps in broadband, with entertainment and phone connection as at least two of them.

But it is the offerings from the big local carriers that are likely to take this market, run in competition with the long distance US operators, at least in the US. Overseas in more liberal telecoms environment it is possible that competitive suppliers will carve out more market share.

Already Qwest has announced plans to launch a residential VoIP service but has yet to price it. While all the local telcos offer special deals for businesses using VoIP already.

The advantages to Telcos is that billing and technical support will be easier once the entire network is turned over to VoIP, but it also offer the potential to invite more competition, which they won’t like.

© Copyright 2004 Faultline

Faultline is published by Rethink Research, a London-based publishing and consulting firm. This weekly newsletter is an assessment of the impact of events that have happened each week in the world of digital media. Faultline is where media meets technology. Subscription details here.

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