Carriers are traditionally leery of cannibalizing their legacy lines of business, but VoIP appears to have become less threatening. Despite the global recession and the pushback of many other carrier infrastructure projects, carrier spending on VoIP gear continues to bounce back, making it one of the bright spots in the capex landscape this year and going into 2010.
Carrier VoIP equipment spending didn’t fade at all in the third quarter, holding steady at $595 million, and poised for growth according to Infonetics. But how is it that VoIP has made the rare shift from enemy to superstar in service provider portfolios? Simply put, the recession has had its beneficiaries, and demand for cost-effective VoIP is just too great, and the money-making opportunities are just too large, to ignore.
“Demand for residential and business VoIP services continues to grow even as spending in other communication areas tightens,” explained Diane Myers, directing analyst for service provider VoIP and IMS at Infonetics. In fact, for the first half of 2009, the worldwide VoIP services market grew to $20.7 billion.
Digging a little deeper, Myers said that demand for budget-friendly residential VoIP services remains healthy, comprising the majority of worldwide VoIP services revenue, with subscribers up 14 percent from the end of 2008. The number of residential/SOHO VoIP subscribers is forecast to top 225 million by 2013. Japan’s NTT, France Telecom in Europe and Comcast Corp. in the States lead as residential VoIP service providers, together holding nearly 20 percent of the world’s VoIP subscribers.
But it’s the business VoIP side that’s really hot. Businesses are coping with the biggest downturn and credit crunch in living memory, and they’re looking to save money by shifting away from spending money on customer premises equipment. And so while managed IP PBX revenue growth has slowed in line with IP PBX shipments, IP Centrex is a dark horse winner, joining hosted unified communications service revenue to account for a 26-percent year-over-year growth in 2009, mainly from small businesses with fewer than 100 employees. As this segment tries to do more with less in a tight economy, network-hosted call features are ever more attractive. Roughly two-thirds of all IP Centrex seats sold in the first half of 2009 went to small businesses.
Carriers are also looking to hold down costs in a tough economy. This is where VoIP adds another benefit to providers besides being a hot service: IP services are more efficient to create, deploy and maintain than TDM, so carriers too can do more with less. Investment in equipment to support VoIP services offers service providers attractive near-term returns and thus, has been a boost to the market. The carrier IP telephony market grew almost 10 percent sequentially to $782 million during the third quarter of 2009.
IMS, while down slightly this year, will be another strong growth going into 2010 as carriers migrate their cores to accommodate the shift to all-IP services. The worldwide IMS equipment market will more than double in 2009, says Infonetics, and will grow to $1.6 billion by 2013.
“The service provider next-gen voice equipment market’s stability is a very good sign for the industry, which has seen a tumultuous year,” said Infonetics’ Myers. Infonetics is expecting an overall industry gear revenue drop of around 30 percent this year compared to 2008, Myers added, making the continued growth in VoIP and IMS gear that much more interesting.
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