More than a dozen companies currently offer VOIP services to U.S. residential customers. Most offer unlimited local and long-distance calls for $30 per month or less, with some as low as $19.95, although those fees do not include the broadband Internet connection that VOIP requires. Comparable plans for traditional service from the dominant U.S. telephone carriers typically cost about $60 to $70 per month. The rise of consumer VOIP has been driven by the growing number of U.S. households with broadband Internet access, as well as steep declines in the cost of the infrastructure necessary to run VOIP services.
Vonage, a New Jersey start-up, was able to garner more than 200,000 subscribers for about $103 mln in venture capital and raised another $105 mln last month for expanding into foreign markets. While industry experts estimate the current residential VOIP market has less than 1 mln subscribers, they expect sharp growth starting in 2005 as large cable companies such as Comcast Corp. roll out their VOIP services. Communications consulting firm Yankee Group forecasts VOIP services will win 17.5 mln residential users by 2008.