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Broadband operators brace for cash tsunami

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VoIP is set to become a massive source of income for broadband operators as more and more punters use their PC to make voice calls.

Industry analyst Juniper Research, reckons that by VoIP (Voice over IP) will generate $47bn a year by 2009, as flat-rate IP-based voice tariffs gradually replace traditional services.

That's on top of the $43bn predicted to be spent on broadband access.

Ian Cox, broadband specialist at Juniper, says broadband penetration has now grown to a level where the industry "is on the verge of a revolution". It is now economically attractive to launch value-added services to a mass audience.

Indeed, only last week BT, the UK's dominant fixed line telco, unveiled plans for a trial of a new service, BT Communicator, which will enable users to make calls using their broadband connections.

Last month, pan-European ISP Tiscali announced it had hooked up with NetCentrex to provide residential broadband telephony services for its one million ADSL punters. As a result, punters in Italy should be able to make voice and video calls using their broadband service by the autumn.

And Skype, the London-based VoIP firm, has recently raised £11m ($18.8m) in second-round funding to further develop its service.

Last month, research outfit Parks Associates said that VoIP could be the killer app for broadband, providing enough of an incentive to sway doubters to ditch their dial-up connections and subscribe to a high-speed Internet service instead.

For, according to another survey by Parks, demand for broadband in the US appears to be tailing off.

Its latest survey into US trends for broadband adoption has revealed that fewer than one-third of US households with dial-up Net access are interested in upgrading to broadband in the next 12 months, down from a half at the end of 2002.

Parks reckons that broadband ISPs are going to have to cut prices or offer more services to tempt punters to sign up to broadband.

"Continued growth in residential broadband requires an ever-increasing number of dial-up households jumping ship to higher-priced, higher-bandwidth offerings," said Michael Greeson of Parks Associates.

"As interest in upgrading declines, broadband service providers must reinvent the broadband market message, significantly lower what they charge for service, or offer some unique combination of these two strategies." ®

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