China's VoIP Growth Outpaces Its PSTN

The growth rate of voice over Internet Protocol has exceeded that of the Public Switched Telephone Network in China, according to a report out Thursday from ReportLinker, a market research engine.

The volume of IP calls in China almost was 110 billion minutes up to September 2006, which is an 11.8% increase year-over-year. IP calls accounted for 43% of long distance calls. The share of VoIP in the long-distance market is forecasted to exceed the total long-distance PSTN and mobile calls in the next two to three years, the report found.

Meanwhile, China also is seeing an increase in illegal VoIP calls, which have been growing 30% every year from 2003 to 2006. Last year, illegal international call volume was about 500 million minutes.

As China yields to the World Trade Organization's requirements, it will experience increased foreign presence. This should give rise to aggressive competition in the country's VoIP market.

Traditional telecom operators became more open to the idea of next-generation networks and VoIP last year, as they began participating in the construction of such networks. Additionally, businesses in China now have a deeper understanding of VoIP. Unlike individual users, business users view VoIP as an opportunity for combining voice and data applications rather than lowering their phone costs, said ReportLinker.

The maturity and decrease in the cost of VoIP equipment also has prompted small- and medium-sized businesses to adopt the technology. As a result, VoIP equipment has increased in scale.

The compound annual growth rate of VoIP equipment spending by Chinese businesses will amount to 48% in the next 5 years; they will spend 4.2 billion Chinese yuan renminbi in 2009.

Large VoIP equipment suppliers, such as Cisco and Avaya, accounted for the majority of the sales in China last year.