Carriers are traditionally leery of cannibalizing their legacy lines of business, but in a down economy VoIP appears to have become less threatening. Despite the global recession and the funding requirements of other 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.
"Global telecom service provider capital expenditures hit a plateau in 2008, marking the end of a five-year investment cycle and the beginning of a three-year disinvestment cycle, albeit a less dramatic one than what followed the great telecom crash of 2000,” said Stéphane Téral, principal analyst for mobile and FMC infrastructure at Infonetics Research. “Capex will bottom down in 2010 and a new investment cycle will start in 2011.”
But carrier VoIP equipment spending didn’t fade at all in the third quarter, holding steady at $595 million, and is poised for growth in 2010, according to Infonetics. 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. For the first half of 2009, she said, the worldwide VoIP services market grew to $20.7 billion.
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.
A Dark-Horse Winner
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.
When it comes to IP Centrex, curiously it’s a traditionally underserved market that is driving the bus on growth in North America: 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.