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US Phone Customers Move from Incumbent Carriers to VoIP: FCC Report

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Nearly half (47 percent) of residential US wireline voice service customers are now using a Voice-over-IP service, and roughly 38 percent are not buying their VoIP service from an incumbent phone carrier like AT&T and Verizon, according to a new government report.

The trend towards VoIP wireline adoption is one of the major trends found in a new report on local telephone competition (PDF) from the Federal Communications Commission, based on data from June 2013 and earlier.

Over the three-year period ending in June 2013, interconnected VoIP subscriptions where users can make and receive calls through a phone number (excluding Skype) increased at an average rate of 16 percent in the US. In the same period, mobile telephony subscriptions grew 3 percent per year, and the overall retail switched access lines declined at 10 percent per year.

Interestingly, according to the report, the rate of VoIP adoption among residential subscribers is three times that of businesses. This might be due to it being simpler for households to substitute new services with their existing telephone services, whereas business might have to institute more complex VoIP systems.

As more customers move over to VoIP, incumbent telecom providers are facing the risk of losing customers to competing VoIP services. However, internet services such as Skype, which is owned by Microsoft and accounts more than two-thirds of all international call minutes in 2012, are making it difficult for many VoIP providers to compete. For instance, VoIP service Jajah, despite being owned by European telecom Telefonica, closed in January.

In this changing consumer landscape, some fear that the telecom system will give way to another system based on a different technology but with just as little competition. However, many companies are fighting to remain in the marketplace such as VoIP pioneer Vonage, which recently acquired cloud phone service provider Vocalocity for $130M to help provide VoIP services to small and medium-sized businesses.

According to the FCC report, only 15.4 percent of businesses use use VoIP, but industry analysts expect this number to grow substantially. This could provide opportunities for niche VoIP service providers as well as the hosting ecosystem that makes these services possible.

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2 Comments

  1. Mobile VoIP is highly popular among them to make international calls through mobile phones. Mobile VoIP offer the best calling features at the lowest cost. The research firm expects VoIP Business revenue will reach $88 billion by 2018 based on continued growth....!!!

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  2. Jackie Lang

    As a sole proprietor, I found it to be extremely important to have a virtual VoIP phone system which is why I made the move myself. I also didn't go with the big guys like Verizon or AT&T due to price but instead I went with these guys: www.mightycall.com I also find it interesting how residential subscribers are making the move more so than businesses. Food for though I guess!

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