Up or Down? What’s it going to be?

VoIP market growing in cable sector, yet shows downturn in first quarter subscription lines

Being in VoIP marketing, I read a LOT about the VoIP industry during the day.  One of the things that confuses me is how more households can be utilizing VoIP lines (particularly through cable providers), yet the market seems to claim that VoIP subscriber line orders are shrinking.

I, for one, am confused.  How can an industry growing in homes and businesses across the country be shrinking? Seems kind of contradictory to me.

First, the bad news.

JR over at iLocus wrote a post on May 20, saying that the VoIP subscriber lines market shrank 19 percent in the first quarter.  The post stated:

In 1Q08, vendors shipped a total of about 7.9 million VoIP Subscriber Feature Server licenses for deployment in service provider networks generating $144 million in revenue. The number of lines is down by 19% Q-o-Q. The 3Q07 and 4Q07 quarters however were unusually high growth quarters for VoIP Subscriber Feature Servers.”

Meanwhile, on a day prior, May 19, Om Malik at GigaOm produced a post on VoIP booming in the U.S. thanks to cable service providers like Comcast, Time Warner, Cox, Cablevision and Charter.

Despite all the troubles with VoIP service providers such as SunRocket and Vonage, VoIP as a technology seems to be doing quite well in the U.S., according to data from Telegeography. As of the end of March, there were 16.3 million consumer VoIP lines, or about 13.8 percent of U.S. households, and 27 percent of households with broadband lines installed.”

Most of the new customers are coming from RBOC’s (At&T, Verizon and Qwest), with that industry losing 17.3 million residential telephone lines, and VoIP service providers gaining 14.4 million new customers.  According to Om’s post, nearly 80 percent have come from cable companies.

So where does this leave the reader or manager inquiring about the industry?  From the way I comprehend it, people are using their current broadband lines to incorporate VoIP, rather than having to buy new lines.  Considering that half of American homes have broadband Internet, new lines are not necessary.

But the good news is that people are jumping onto VoIP, and will have a need for more VoIP systems and services.  The telecom that could is growing in a big way.



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  1. Nicole,

    Great post.

    The market instant shrinking, it just slowed down last quarter.

    You can look at the market in a few ways, hence the discrepancy:

    1. Quarter over quarter growth (like JR @ iLocus).

    2. Overall market penetration (as Om did)

    Rest assured that the market IS growing, however, as the market matures, it is inevitable that it won’t grow AS fast as it has in the past.