New data from TeleGeography’s European VoIP & Triple Play Research Service reveal that voice over IP (VoIP) subscribers have grown from just over six million in 2005 to 34.6 million at year-end 2008. VoIP now accounts for more than 24% of fixed line telephone subscribers in Europe.
VoIP service revenues of EUR4.1 billion are still dwarfed by the nearly EUR36 billion generated by traditional switched fixed-line services. However, the impact of VoIP on the European fixed-line market is greater than its relatively modest subscriber and revenue share would suggest, due to the strong downward pressure VoIP-based competitors place on voice service prices.
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Many European incumbent telephone companies have responded to this pressure by introducing discounted VoIP service, by slashing switched telephone service prices, and by marketing voice as one component of dual-play or triple-play bundles of voice, broadband, and video. These measures have helped incumbents to defend their market shares, but at the cost of sharply reduced voice revenues. Aggregate revenues from switched and VoIP telephone service have fallen from EUR49.4 billion in 2005 to EUR39.9 billion in 2008 and are projected to decline to only EUR26.2 billion by 2013.
According to TeleGeography analyst Paul Brodsky, 'Fixed-line telephony was the cash cow that allowed incumbents to invest in mobile telephony, broadband, and video services. However, in Europe today, voice is increasingly just a loss leader, used to sell broadband and video services.'