VoIP To Hit 12.1 Million US Households By 2009

Broadband Telephony, better known by the acronym VoIP, is set to grow
dramatically over the next five years according to new research. A
Jupiter Research report, “Broadband Telephony: Leveraging Voice Over IP to Facilitate Competitive Voice Services” forecasts VoIP adoption will grow from only 1 percent of all US broadband households in 2004 to 17 percent by 2009 (representing 10 percent of all US households).

The growth marks a meteoric rise for the emerging technology which, at the end of 2003, had a base of almost zero. Some 400,000 households will use VoIP by the end of this year. Usage is forecast to balloon to 12.1 million by 2009.

Percentage of US Broadband Consumers
PC-to-PC voice chat or IM 11%
Voice chat in multiplayer PC game 4%
Voice chat in multiplayer console game 3%
VoIP as primary phone line 3%
Voice input on PC 2%
Voice chat with customer support via PC 2%
VoIP as second or third phone line 2%
PC-to-phone call 2%
Used none of these in the past six months 56%
I have never heard of these services 25%
Source: JupiterResearch

That said, VoIP has far to go based on current perceptions and usage. Only 3 percent of US broadband consumers report they used VoIP at least once in the past 6 months as a primary phone line. Two percent say VoIP is used as a second or third line. Over half of broadband consumers (56 percent) used no IP Voice Applications at all in the past 6 months.

Price may not necessarily be the overriding factor driving VoIP growth and demand. Jupiter Research believes VoIP service rates aren’t very elastic, noting a 38 percent price reduction (from a base rate of $39.99) would yield only a 10 percent increase in demand.

Despite perception that VoIP is a low cost alternative to the phone, higher income users also express interest in the technology.

“You kind of expect that given the value proposition is all about cheap, it would be lower income users who were most interested,” commented Joe Laszlo, the Jupiter Research senior analyst who headed the study. “There was a surprising amount of interest among high income users. They certainly have the income to pay for a standard telephony voice line into the home, but even people with relatively high incomes look to save money where they can. I think that creates an interesting possibility.”

According to Laszlo, the conventional wisdom of younger is better in terms of technology adoption isn’t true in regard to VoIP.

“The younger you get, the more you get not an interest in VoIP, [but] in wireless as the only phone,” Laszlo said. “The biggest competitor to VoIP are the cellular providers, not the local phone company.”

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