Frost & Sullivan says the Internet telephony market will grow to $1.79 billion by the end of 2001
SAN FRANCISCO, CALIFORNIA, U.S.A., Newsbytes via Individual Inc., July 22, 1997 -
A new report by research firm Frost & Sullivan says the Internet telephony market will grow from $19.8 million in 1996 to $1.79 billion by the end of 2001, for a compounded annual growth rate of 149 percent. The report says the Pacific Rim, Europe, and the rest of the world will account for 73 percent of the total, while North American markets will come only to about 26 percent.
Report author and Telecommunications Analyst Francois Eric de Repentigny said this "phenomenal" growth will not remove several factors now limiting the market, including "the lower sound quality of Internet telephony as opposed to public-switched telephone networks" and lagging upgrades of Internet service provider (ISP) and corporate infrastructures.
De Repentigny acknowledged that a three-to-one ratio of revenues and investments in new technology in international as opposed to North American markets is unusual.
In an interview with Newsbytes, de Repentigny said: "What we're seeing now is most of the revenues and investment coming from North America, as you might expect, but it will reverse. The main reason is that the savings realized with Internet telephony will be much greater outside of North America."
He explained that price drops due to deregulation in North America and other industrialized areas will continue into the foreseeable future. "Right there, you're cutting into one of the main drivers for Internet telephony. To that, add the fact
that Internet access costs will go up as bandwidth-intensive applications increase and users start being charged according to the bandwidth they consume. It will level the prices."
According to de Repentigny, Internet telephony requires more bandwidth than the simple, low-fidelity sound quality associated with telephones might lead one to believe, because of problems with latency, or uncontrolled pauses in transmission. He said a protocol now being developed to reserve a certain dedicated bandwidth for uses like voice and video telephony will make for a more acceptable experience, "but you will eventually have to pay accordingly."
He added that, in areas like the Pacific Rim, where the physical infrastructure is still being developed, Internet telephony will allow areas in effect to double-up the uses for what they do have. The savings will be significant, and the technology will grow accordingly.
In the report, de Repentigny attributed the predicted growth to a wide range of factors including "toll-bypass or toll-reduction capabilities" (cost savings), rapid improvement in the client telephony products, spreading interoperability between systems, and the rapid growth in both usage and commercial importance of the Internet in general and intranets in particular."
Other factors he cited include a growing need for multimedia communications, and the integration of voice and data networks. The report analyzes the Internet telephony market by client products (Internet telephony application programming interfaces and software development kits), voice telephony software(gateways),
videoconferencing software (traditional DVC systems, Internet DVC, and multipoint DVC) and groupware markets (transitional technologies, audio and videoconferencing capabilities, and cross-platform and mixed network capabilities).
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