Revision as of 18:31, June 4, 2007 (edit)
Idugal - Sr. Director (Talk | contribs)

← Previous diff
Revision as of 18:33, June 4, 2007 (edit) (undo)
Idugal - Sr. Director (Talk | contribs)

Next diff →
Line 32: Line 32:
[[Long distance discount service providers]] are another group that will continue to be weakened by the free/low cost [[long distance]] services of VoIP. [[IDT Corporation]] ([[IDT]]) is an example of a long distance [[prepaid calling card]] provider, while [[Primus Communications]] ([[PRLT]]) is [[discount long distance provider]]. [[Long distance discount service providers]] are another group that will continue to be weakened by the free/low cost [[long distance]] services of VoIP. [[IDT Corporation]] ([[IDT]]) is an example of a long distance [[prepaid calling card]] provider, while [[Primus Communications]] ([[PRLT]]) is [[discount long distance provider]].
-[[Mobile Carriers]]: VoIP's free/low-cost economic model could do in [[wireless]] just what it has done in [[wireline]] — shake the crusty economic foundation of a mobile industry built around [[price per minute]] and [[minutes of usage]]. Leading regional carriers such as [[Alltel]] ([[AT]]) and [[U.S. Cellular]] ([[USM]]), with billions already spent on proprietary network infrastructures, will continue to face tough competition from upstarts such as [[Skype/Ebay]] ([[EBAY]]), whose [[network client software]] is enabling wireless voice. Some carriers are taking aggressive steps to stay ahead of the [[mobile VoIP]] revolution. [[Sprint Nextel]] plans to spend billions in capital expense to deploy networks using VoIP compatible [[WiMax]] technology. +[[Mobile Carriers]]: VoIP's free/low-cost economic model could do in [[wireless]] just what it has done in [[wireline]] — shake the crusty economic foundation of a mobile industry built around [[price per minute]] and [[minutes of usage]]. Leading regional carriers such as [[Alltel]] ([[AT]]) and [[U.S. Cellular]] ([[USM]]), with billions already spent on proprietary network infrastructures, will continue to face tough competition from upstarts such as [[Skype]]/[[Ebay]] ([[EBAY]]), whose [[network client software]] is enabling wireless voice. Some carriers are taking aggressive steps to stay ahead of the [[mobile VoIP]] revolution. [[Sprint Nextel]] plans to spend billions in capital expense to deploy networks using VoIP compatible [[WiMax]] technology.
==Who will stand to Gain?== ==Who will stand to Gain?==
Line 46: Line 46:
VoIP [[Semiconductor manufacturers]] will see demand for their [[chips]], which are embedded in [[network hardware]], grow with the demand for VoIP equipment. Among the leaders in this area are [[Broadcom Corporation]] ([[BRCM]]) and [[Texas Instruments]] ([[TI]]). VoIP [[Semiconductor manufacturers]] will see demand for their [[chips]], which are embedded in [[network hardware]], grow with the demand for VoIP equipment. Among the leaders in this area are [[Broadcom Corporation]] ([[BRCM]]) and [[Texas Instruments]] ([[TI]]).
-VoIP [[software providers]] are just as essential as hardware manufacturers for making VoIP work. Software is commonly used on PC's as softphones in order to convert [[analog]] voice to [[digital]] packets. VoIP software can also reside on [[handsets]], [[gateways]], VoIP [[servers]] and VoIP [[web conferencing equipment]]. Leaders in the VoIP software revolution include [[Ebay/Skype]]([[EBAY]]), [[Microsoft]] ([[MSFT]]), and [[Google]] ([[GOOG]]).+VoIP [[software providers]] are just as essential as hardware manufacturers for making VoIP work. Software is commonly used on PC's as softphones in order to convert [[analog]] voice to [[digital]] packets. VoIP software can also reside on [[handsets]], [[gateways]], VoIP [[servers]] and VoIP [[web conferencing equipment]]. Leaders in the VoIP software revolution include [[Ebay]]/[[Skype]]([[EBAY]]), [[Microsoft]] ([[MSFT]]), and [[Google]] ([[GOOG]]).

Revision as of 18:33, June 4, 2007

Few technologies have the potential to dramatically change the telecommunications landscape. Today, traditional phone lines are slowly being phased out as businesses and households around the world embrace the benefits that VoIP technology has to offer. Voice over Internet Protocol, also known as VoIP, Voice over Broadband, and IP telephony, is a technology that enables people to use the Internet as the transmission medium for telephone calls. VoIP allows user to avoid long distance phone charges and save on expensive telephone infrastructure costs. The concept of VoIP originated in 1995, when hobbyists began to recognize the potential of sending voice data packets over the Internet rather than communicating through standard telephone service. Since 2000, usage has increased at meteoric rates. Analysis from a leading research firm estimates that the North American residential VoIP Services Market alone was $1.22 billion in 2005, and has been growing at a 31.1% CAGR.

As VoIP adoption continues to accelerate; traditional phone companies will face fiercer competition from VoIP-enabled service providers. Over time, they will see their customer base disrupted, and hence, their [[operating margins] and growth prospects decreased. Consequently, this disruption will drain traffic from discount long distance service providers, and decrease demand for the services of third party voice/telephone companies. In contrast, the companies that provide access services, manufactur the VoIP equipment, software, and semiconductorchips used in developing VoIP networks will have the greatest opportunity to steal market share from incumbents and accelerate revenue growth.

What is driving VoIP Adoption?

Generally speaking, there a few primary drivers of VoIP:

Regulation

VoIP regulatory issues, including regulatory fees and 911 access problems, have become key concerns for regulators, service providers, and customers alike. For example, in June 2005, the FCC imposed Enchanced 911 obligations on providers of VoIP interconnect services, resulting in increased operating and capital expenses for all providers. Many companies are scared to implement VoIP due to concerns about future government regulation of the technology, which could result in additional taxes and fees. Since VoIP is a relatively new technology, it could be years before we are aware of the full breath of regulatory restrictions. For example, the FCC is currently deciding if it is okay for PSTN companies to charge access charges to VoIP providers.

Cable “Triple Play

The rapid growth in “Triple Play” from cable companies will likely continue to generate greater IP-telephony adoption rates. Cable companies are not only providing VoIP for consumers, but also for small and medium sized businesses. Cable company’s ability to successfully bundle broadband telephony with other relevant services will continue to drive customer adoption of cable-based VoIP, which currently accounts for 71% of the VoIP telephony market in the U.S. Growth in cable-based VoIP may drive the market going forward. After more than 10 years in the telephony business, cable operators have finally struck a chord with customers, as demonstrated by the acquisition of about 3.6 million new cable VoIP customers in 2006 alone.

Reliablity

VoIP reliablity is crucial to adoption, especially at the enterprise level where downtime is often unforgivable. Many potential VoIP customers are waiting to see voice quality improvements before making a purchase. Quality of Service, or QoS technologies are being deployed in many VoIP networks in order to prevent against call loss, jitter, delay, and other troublesome quality issues.

Cost Savings

For businesses, in addition to direct call savings, VoIP cuts costs by replacing separate voice and data networks with one common infrastructure, eliminating duplication. Thus, instead of paying phone companies to carry their voice traffic, companies can send much of it over the spare capacity on their existing data networks. Moreover, VoIP allows providers to replace centralized, proprietary switches with standards-based devices that drop in price as rapidly as PCs.

Increased functionality

VoIP users can benefit from functionality that is not standard feature from most phone companies, such as caller ID, 3-way calling, call attendant, call forwarding, call blocking, voice mail, etc. VoIP enables a new usage model which has been extremely expensive or difficult to deploy in traditional enterprise phone networks. For example, incoming phone calls can be automatically routed to an employee’s VoIP phone wherever the employee plugs it into their network. In addition, with the growth of telecommuting, employees using VoIP can easily work from anywhere with a good Internet connection.

Who will stand to Lose?

Accelerating VoIP adoption poses challenges for many companies, including:

Telephone companies will be harmed by adoption as telephone customers will continue to disconnect their phone lines in favor of VoIP. The vast majority of the United States is served by two types of telephone companies, RBOCs (Regional Bell Operating Companies) and CLECs (Competitive Local Exchange Carriers). Leading U.S.CLECs include CenturyTel (CTL), Embarq (EQ), and XO Communications (XOHO). RBOCs include Qwest Communications (Q), Verizon Communications (VZ), and AT&T (T). According to Telegeography Research, U.S. RBOCs lost nearly 150,000 subscriber lines per month in 2006. While many [[RBOCs], including AT&T, and CLECs, such as XO have started to provide VoIP services to their customers, they are taking the risk of cannibalizing their existing telephone voice services in the process.

Third-party service and technology providers will see demand decrease as users migrate to feature rich VoIP. Examples of features that are or will be standard with VoIP, but are premium services with traditional lines include caller ID, call waiting, audio conferencing, and call attendant. Voice conferencing companies ACT Teleconferencing (ACCT), and Premiere Global Services (PGI) will be adversely impacted by VoIP providers who offer free conferencing. New features are constantly being added to VoIP, and will continue to disrupt the businesses of other telephone voice services providers.

Long distance discount service providers are another group that will continue to be weakened by the free/low cost long distance services of VoIP. IDT Corporation (IDT) is an example of a long distance prepaid calling card provider, while Primus Communications (PRLT) is discount long distance provider.

Mobile Carriers: VoIP's free/low-cost economic model could do in wireless just what it has done in wireline — shake the crusty economic foundation of a mobile industry built around price per minute and minutes of usage. Leading regional carriers such as Alltel (AT) and U.S. Cellular (USM), with billions already spent on proprietary network infrastructures, will continue to face tough competition from upstarts such as Skype/Ebay (EBAY), whose network client software is enabling wireless voice. Some carriers are taking aggressive steps to stay ahead of the mobile VoIP revolution. Sprint Nextel plans to spend billions in capital expense to deploy networks using VoIP compatible WiMax technology.

Who will stand to Gain?

Several categories of companies stand to gain from the adoption of VoIP, including:

Although Independent VoIP Providers are included here under positive exposure, independents such as Vonage Holdings (VG) and Packet8 (EGHT) are struggling to retain market share and preserve their businesses amid escalating competition from cable companies and established telcos offering VoIP. In markets like the US, independents could see market growth frozen if regulators decide against them on the network neutrality issue now being fiercely debated by regulators and legislators.

Cable television companies are leading the convergenceof voice, video, and data communications over a single broadband connection (often referred to as Triple Play). VoIP has created new revenue opportunities for the likes of Comcast Corp. (CMCSA), and Time Warner Cable, Inc. (TWC), who can now bundle voice services with their television and internet services, effectively circumventing traditional phone companies.

VoIP Equipment Manufactures will see the demand for VoIP equipment increase with the surging adoption of VoIP. Many of the same companies that provide equipment for traditional phone networks will now have a new category of VoIP service providers as a customer. A equipment focused reearched firm estimated that $1.73 B was spent on VoIP network equipment in 2004. Among the leading equipment manufacturers are Cisco Systems (CSCO]), Nortel Networks (NT), and Alcatel-Lucent (ALU).

VoIP Semiconductor manufacturers will see demand for their chips, which are embedded in network hardware, grow with the demand for VoIP equipment. Among the leaders in this area are Broadcom Corporation (BRCM) and Texas Instruments (TI).

VoIP software providers are just as essential as hardware manufacturers for making VoIP work. Software is commonly used on PC's as softphones in order to convert analog voice to digital packets. VoIP software can also reside on handsets, gateways, VoIP servers and VoIP web conferencing equipment. Leaders in the VoIP software revolution include Ebay/Skype(EBAY), Microsoft (MSFT), and Google (GOOG).

Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki