IP telephony - A technical market report - PTS-ER-2003:41

13/11/2003

Both the market and the technical performance regarding IP telephony have developed significantly since the Israeli company VocalTec launched their InternetPhone® in 1995. The product made it possible to talk to another person over the Internet, using two computers. Today there are several IP telephony products and services available for both consumers and business users, either through calls from one computer to another, or from one ordinary telephone to another.

The technology is largely relying on two standards; the newer SIP or the somewhat older H.323. The major vendors have all realized that SIP will eventually dominate the market, but given the large installed base of H.323 equipment, a migration between the two standards is an absolute requirement.

Future development includes IP telephones compatible with Wi-Fi, i.e. wireless access. Also IP communication, where the IP network offers new services such as video conferencing, messaging and presence, is a plausible development.

The market demand is, however, still rather limited. To date only some one thousand companies in Sweden use IP telephony and the forecast says that only three percent of the companies will use IP telephony in three years time2. Also the consumer demand is limited. Broadband providers such as Bredbandsbolaget, Digisip and IP-Only has launched IP telephony services during the last year, reaching a total market of some 30 000 subscribers according to press releases from the companies. The question is whether this somewhat rapid take up of consumers will continue, or if the market already is stagnating?