The US and European telecom markets are diverging at a rapid pace. In Europe, regulatory policies force incumbent operators to manage their network infrastructure separately from their retail services. Next-generation network facilities, even fiber-to-the-home connections, are available to all competitors on an equal basis. The result is thriving competition in most consumer market segments.
In 2006, European incumbent operators lost a combined 10 million fixed-line subscribers. During the year, over 14 million consumer households converted to VoIP, with the incumbent operators adding nearly 3 million VoIP subscribers. Across Europe there is a growing sense of urgency, in terms of building next-generation networks, introducing new services and winning the customer's preference. The urgency is exemplified by the recently negotiated settlement between Deutsche Telekom and union workers that calls for a 6% pay cut, and a longer work week.
In contrast, the US consumer telecom market lacks significant competition.
Competitive service providers do not have access to the incumbent's next-generation network infrastructure. The former RBOCs lost a combined 4.5 million fixed-lines in 2006, yet, accounted for less than 300,000 of the total 4.4 million VoIP subscribers added during the year. Cable operators continue to market VoIP as plain-old-telephone service and the RBOCs do not even include VoIP in their triple-play service bundles.
If the consumer VoIP market is representative of the future telecom industry, US consumers may be the big losers. One cannot criticize US wireline and cable operators for capitalizing on a duopoly market to maximize ARPU and introduce new technology in a timeframe they dictate. But there is no guarantee that consumers will always look to these operators for voice service. The farther the US falls behind in next-generation consumer services, the greater the opportunity for market alternatives.
In-Stat's soon-to-be published research report Europe Leads the Booming Consumer VoIP Market, examines the development of consumer VoIP markets worldwide. The report provides an in-depth analysis of consumer VoIP markets by geographic region and postulates about global VoIP's long-term future. This report will be available online.