The evolving broadband market and introduction of 'naked' DSL will see VoIP putting pressure on the traditional telephony market over the next four years according to a recent IDC report.
The report, titled "Australia Broadband Market Forecast: Naked DSL to become lethal to PSTN" found that the broadband market generated total revenues in excess of $1.1 billion in 2004 and predicts this will rise beyond $2 billion by early 2006 and reach $3.5 billion by 2009.
About 30 percent of Australian households will have a broadband subscription by the end of the year and by the end of 2008 one in two households will have broadband, according to the report.
The report predicts that Naked DSL services (broadband delivered without a dial tone) will be introduced within the next 12 to 18 months and will take full advantage of the Unbundled Local Loop (ULL).
This will boost VoIP take up, with consumers being able to do without a phone line all together and opt for cheaper VoIP deals. This will place pressure on traditional telephony revenue according to associate telecommunications analyst, Shing Quah.
"Traditional PSTN voice revenues will not vanish overnight particularly due to the large and extensive installed base," she said.
"However, while IP voice is gaining momentum, PSTN revenues reached their peak in 2004 at $10 billion and we expect this to decline to $6.4 billion in 2010."
Quah said that consumers and business will expect top quality VoIP.
Voice remains one of the most mission-critical business applications and consumers take it for 'granted' that voice will work," she said.
Quality VoIP will not be an issue for businesses with sufficient bandwidth and Quality of Service/IP packet prioritization turned on, Quah said.
"However, it will not be just 'basic VoIP' that businesses expect now but the ability to run high quality wireless VoIP over their networks too," she said.
As for the consumer market, Quah pointed out that consumer VoIP has so-far been driven from a 'best effort at the cheapest call rate' angle.
"With the number of QoS-enabled consumer CPE routers entering the market however, we can expect the quality to improve over time though the quality will still also be determined by other factors such as throughput and the type of the home network," she said.
"Generally, as VoIP usage ramps up, quality will be less and less of a concern."