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Voice Over IP Looks Ready For Breakout

Infonetics Research estimates that spending on the technology will rise from $1.2 billion in 2003 to $4.8 billion by 2007.
Internet telephony has been something of a sleeping giant, but it's finally waking up as major carriers begin spending billions on the emerging technology, according to a study released this week.

Infonetics Research estimates that spending on next-generation voice gear worldwide was $1.2 billion in 2003, but that figure will jump to $4.8 billion by 2007, Infonetics' directing analyst Kevin Mitchell said.

"We talked with 32 carriers--major and minor," Mitchell said in an interview Wednesday. "And we found out what's driving them It's no longer just specialists or voice over IP pioneers, but all types of carriers in all regions of the world that are adopting VoIP technology and using it to build a new set of service offerings."

Mitchell said that new applications and services--"Features they can't offer now"--are clear enticements to enter voice over IP, and were cited as such by 72% of the respondents in the Infonetics survey. A total of 94% said they planned to offer hosted IP voice by 2005--up from 56% in 2004.

Mitchell noted that top-tier service providers look at their rollouts of voice over IP as a strategic tool to combat revenue erosion in increasingly competitive telecommunications markets. He also observed that multiprotocol label switching--in routers primarily-is many service providers' most popular means of offering quality service in a cost-effective manner.