2007 Global NGN IP VoIP

A huge change is taking place in telecoms infrastructure, with the traditional telephone systems being replaced by an IP-based infrastructure. This will facilitate data communications and file transfers via networked computers. IP is now adapted for voice communications (VoIP) and most corporate users are on IP networks. However, the true value of IP is that it is becoming the core of the next generation public networks (NGNs), facilitating affordable triple play business models that seamlessly integrate voice, data and video. NGN projects are very complex in nature however, and due to this their progress still remains slow.

Once NGNs are in place, there will be a major impact upon current infrastructures. Voice services will be placed under increasing pressure from VoIP and mobile communications will consolidate in mature markets but continue their spectacular growth in developing countries. Wireless broadband will also begin to challenge 3G, as it is much better suited for the delivery of mobile data, including Mobile VoIP.

Fixed VoIP is becoming more prominent in corporate and government markets, due to the fact that good NGNs are already in place. In the residential market, VoIP has traditionally been viewed as a 'hobby' product linked to the Internet - but this appears to be slowly changing, with residential VoIP subscribers more than doubling in 2006. However, the real breakthrough for VoIP will be when NGN quality broadband networks are delivering triple play business models to the mass market. The uptake of VoIP will further reduce the revenues of telcos and add more pressure on them to seek new revenues streams. Separately VoIP will become an integral product offering in most Internet media products.

The growing importance of e-commerce has led to a further key trend, where companies are moving away from building and/or maintaining their own networks, and outsourcing to NGN operators. With an increase in data services both in the business and the residential market, the market for outsourcing and other forms of external assistance will continue to grow. Based on convergence developments around IT and telecoms and driven by broadband, a significant growth in outsourcing starting to emerge. The overall outsourcing sector is expected to grow by around 8% in 2007.

In recent times the telecom space has become a key focus for many of the IT vendors, and some services firms have developed specialist areas aimed at attracting and capturing telecoms outsourcing deals. Cost savings are still the major driver to outsource, but improvements in quality are increasingly becoming a key reason.

This report provides a global overview on the progression of NGNs, with a focus on IP/VoIP. It also includes information on the developments taking place regionally across the Americas, Europe, Africa, Middle East and Asia Pacific. The report provides analyses, statistics, forecasts and trends.

Key highlights:

• Already around 50% of all global telecoms traffic is done over IP, and this will increase to 75% in a few years time.
• A modest growth in telecoms capital expenditure is expected over the next three years; capital expenditure for NGN's will focus on broadband/triple play expansion plans.
• Managed services, the use of specialist third parties to deliver IT services, is set to increase significantly over the next five years.
• An increase in VoIP subscribers has usually been driven by mass-marketing efforts by the incumbents, and the inclusion of VoIP in double/triple play models. This has been witnessed in France and the Netherlands.
• While we have not witnessed a major move towards VoIP to date, 2006 did see an increase in users in the residential market.
• Worldwide residential VoIP subscribers - 2005 - 2006; 2009

Year (e) Approximate subscribers (million)

• 2005 20
• 2006 39
• 2007 135

(Source: BuddeComm based on industry sources, 2007)

• Skype is still the global market leader, with over 170 million registered users; around 30% of these are business users.
• The market for VoIP equipment is growing at around 25% per year.
• The future of VoIP lies in video webconferencing. Web-based videoconferencing is presently one of the largest growth markets. Pent-up demand has been building for decades, and while services have been launched in the past, both the technology and the economics failed to deliver a compelling product for users.
• In terms of VoIP subscribers, Japan led the VoIP market in 2006 with almost 14 million subscribers, followed by the USA and France.
• The growth of NGNs in Asia is mostly focused on the developed markets and has been heavily dependent on the local support provided by the governments in those markets.
• VoIP is continuing to gain ground in Africa following deregulation, steady improvements in Internet bandwidth and a growing number of service providers entering the market. Telkom South Africa is planning to invest $5 billion into its NGN over the next five years.
• One of the drivers behind NGN deployments in the US is VoIP, which has become one of the fastest growing US telecommunication sectors, boasting growth rates of around 150% in 2006.