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VoIP applications and services, which allow residential customers to avoid call charges, could grab up to 13 per cent of the European phone market by 2008.

This is one of the key findings of a new Analysys report Voice Communications: From Public Service to Private Application. It estimates that more than 50 million broadband users could be taking advantage of Private Voice Applications (PVAs) within four years.

PVAs support voice communications over existing broadband connections, bypassing the existing PSTN network. As a result, voice services are decoupled from the underlying networks. Although the economics of the system are compelling, its adoption will be limited by structural issues.

"One of the big ceilings for adoption of PVAs is the level of broadband take-up," Stephen Sale, co-author of the report, told ElectricNews.net. "One of the reasons that Skype has taken off is the fact that there's broadband infrastructure there to support it."

PVAs can be offered through various technologies, over both public and private networks. The services can be offered by a wide variety of players, not necessarily by the companies who own the telecommunications networks.

For example, the PVA offered by Skype Technologies enables people to make calls using a PC and a headset, instead of using a handset. Skype's software has been downloaded more than 32 million times since its launch in August 2003. Such applications are typically used to make longer calls to friends and family, which is the core telephony business of fixed-line incumbents. When PVAs are combined with increased mobile usage, consumers may decide that they don't need a PSTN subscription account.

In revenue terms, the impact on telecom operators could be drastic. Incumbents could potentially lose over €3.3bn of subscription revenues in 2008, and cumulatively about €6.4bn over the period between 2004 and 2008.

The report predicted that the telecommunications industry would move from its current form, where each geographic area had its own telecom operator, to a situation where VoIP services are offered around communities, segments and brands.

Ultimately the amount of money earned by the telecommunications industry would drop, because of the decrease in toll revenues. The only ray of light for the industry is that other subscription services could be added into the mix, offering potential new revenue streams.

Research from consultancy firm Mercer has suggested that internet-based phone services could be in use by up to 30 per cent of homes in the UK and the US in the next three years.

Last month, Comreg, Ireland's communications regulator, said it planned to introduce a new "076" prefix for Ireland, which would allow conventional landline users to call people who use Internet-based VoIP services. In some cases, consumers and businesses wishing to switch from a traditional phone service to a VoIP service will be able keep their old phone number.

© ENN

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