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Corporate VoIP market could reach EUR7.4bn by 2007, says Analysys

* Cost savings, reduced complexity and new features drive VoIP growth

* VoIP market currently being held back by its immaturity and competing standards

* Managed service providers will be among the main beneficiaries of growth

* EUR1.2bn of operator revenue under threat from cannibalisation

CAMBRIDGE, UK, June 10, 2002 - The corporate voice on IP (VoIP) service market in Western Europe will reach EUR2.5 billion by 2007 (15 per cent of the market), or as much as EUR7.4 billion (41 per cent of the market) if the service really takes-off, according to a new report IP Voice Services: European corporate market forecasts 2002-2007, published this week by Analysys, the global adviser on telecoms and new media

"Voice on IP is finally becoming capable of substituting for circuit-switched systems, and on managed networks can match or even better voice quality," says report author Margaret Hopkins. "It is already being used to carry an estimated six per cent of international traffic on routes where competition is limited, and is now a serious consideration for corporate communications managers, because of the expected savings in capital costs, per-call costs and system management costs."

While voice telephony currently still generates 80 per cent of telecoms profit, the rapid growth in data traffic means that voice is now only a small fraction of the traffic carried by big operators, says Analysys. Integrating all traffic onto a single packet-based network is viewed by many operators as a way to achieve better economies of scale.

Figure 1: Total corporate VoIP revenue, low-case scenario [Source: Analysys Research, 2002]
Figure 2: Total corporate VoIP revenue, high-case scenario [Source: Analysys Research, 2002]

Both charts available to journalists on request.

At the moment, VoIP's most compelling advantage is the cost-effectiveness with which small sites can be connected to a corporate voice network. However, the fact that there are now three competing protocols for end-user VoIP terminals - H.323, MGCP (media gateway control protocol) and SIP (session initiation protocol) - will slow down market development, and current systems still often require significant debugging.

"Voice on IP is still a maturing technology, which will have clear advantages for the corporate network when it becomes straightforward to deploy," adds Hopkins. "However, it still has to conclusively demonstrate its advantages over voice on frame relay and voice on ATM."

In the long-term, VoIP will win out, according to Analysys, because it holds out the promise of new features, low-cost and easy-to-use voice systems. It also offers the possibility of multimedia conferencing services, which can include pushed Web pages showing PowerPoint slides or other material, instant messaging, video interaction, screen sharing and shared white-boards.

"These services will be truly location independent, so that call management and conferencing facilities can be hosted wherever the connectivity is good," says Hopkins. "VoIP also promises to bring the features of large corporate voice systems to small sites and teleworkers, including free intra-organisation calls."

Inevitably, the growth of VoIP will lead to some cannibalisation of existing corporate voice revenues for the operators, and, according to Analysys forecasts, this could total EUR1.2 billion in 2007, 6.5% of the overall corporate voice market.

"Carriers can compensate for this by developing value-added services such as hosted iPBX (IP Centrex) systems and multimedia conferencing services," adds Hopkins, "but they risk seeing this market go to the systems integrators."

IP Voice Services: European corporate market forecasts 2002-2007 examines how far VoIP is capable of providing all the features currently available in circuit-switched voice systems, assesses the capabilities of the technologies on offer and analyses the strategies that the different types of operator are adopting. Forecasts for VoIP revenues from corporate users (organisations of 500 or more employees) are provided for Western Europe and for France, Germany, Sweden and the UK. Report pricing starts from EUR1445. For more information, telephone Analysys Research on +44 (0) 1223 460600 or email

About Analysys

Analysys, the global adviser in telecoms, IT and new media, works at the forefront of the communications revolution, delivering advice and insight to established and new entrant players. From offices in Cambridge, London, Glasgow, Madrid, Milan, Paris, San Francisco and Washington DC, Analysys staff provide strategy and systems consultancy, information services and start-up support to the companies that are creating the networked economy. Analysys Research reports and database services provide authoritative coverage of this convergent industry, based on an unrivalled ability to fuse real-world experience, rigorous research and forward-looking analysis.

Recent reports include:

* IP Voice Services: European corporate market forecasts 2002-2007 (May 2002)

* Scenarios for the European Telecoms Market 2002-2007: forecasts and analysis (May 2002)

* Benchmarks and Key Performance Indicators: lessons from the European telecoms market (April 2002)

* The Reality of GPRS in Europe: subscribers and revenue (April 2002)

* Western European Mobile Forecasts and Analysis 2002-2007 (March 2002)

* Session Initiation Protocol: SIP-related European revenue forecasts 2002-2007 (February 2002)

* Public Wireless LAN Access: US Market Forecasts 2002-2007 (January 2002)

* Video Streaming for Enterprises: forecast revenues for service providers (December 2001)

* GPRS Roaming: technical options and strategic implications (December 2001)

* Storage Area Networks: New Revenues for Optical Carriers? (November 2001)

* Public Wireless LAN Access: Market Forecasts (November 2001)

* Pricing GPRS Services (October 2001)

* FRIACO: how capacity-based interconnection strengthens the Internet market (October 2001)

* Meeting the Challenges of GPRS Billing (September 2001)

* The Bandwidth Exchange: Herald of a New Carrier Age (August 2001)

* Public Wireless LAN Access: A Threat to Mobile Operators? (August 2001)

* Controlling the 3G Value Chain (July 2001)

* Successfully Marketing Mobile Data Services to SMEs (July 2001)

* Gigabit Ethernet: the solution to the MAN bandwidth bottleneck? (July 2001)

* Market Realities of IP-VPNs (July 2001)

Media contacts (for author photography, executive summaries and interviews)

Martin Brooke

Martin Brooke Associates

Tel: +44 (0)1223 264050


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