IP Telephony: Nearly 3 Billion Minutes of Use by 2000

The worldwide Internet protocol (IP) telephony market will explode from 310 million minutes of use in 1998 to 2.7 billion by the end of 1999, according to a report by International Data Corp. (IDC).

IDC’s report “IP Telephony Services: Market Review and Forecast, 1998-2004,” the number of IP telephony minutes will reach 135 billion by 2004, and revenue for this service will rise from $480 million in 1999 to $19 billion by 2004.

IP telephony is the real-time transmission of voice signals using Internet protocol over the public Internet or private data network. It provides less expensive long distance and international communications because data networks do not charge for the distance a call travels and because they are not regulated.

“The consumer market, where price shoppers predominate, has been driving growth of the Internet protocol telephony market because of the cheap phone call services,” said Mark Winther, group VP for IDC’s Worldwide Telecommunications research. “Specifically, expatriate communities and international travelers are using IP telephony services to originate and terminate calls in the United States, Asia/Pacific, Latin America, Europe, and the Middle East.

According to IDC, the business market has been slow to adopt IP telephony because of quality and usability issues.

“Business users are unlikely to use IP telephony when it requires callers to dial 24 or more digits. User access has to be transparent and quality of service has to improve,” Winther said. However, vendors are addressing these concerns. Larger IP telephony service providers are enhancing call quality and integrating their services with corporate virtual private networks.”

As a result of this, IDC expects widespread use of IP telephony in the business market by 2001. By 2004, IDC forecasts the size of the business market will surpass the consumer market.