Net telephony worth $2b by 2002 - report

That's the verdict of market researcher Frost & Sullivan in its latest study, The World Market for Internet and Intranet Telephony.

A prediction of a market worth $1.89 billion by the end of 2001 contrasts starkly with today's paltry market value estimation of $19.8 million. However, a forecast compound annual growth rate of 149 per cent will be spurred by better products, improved interoperability, more people online, multimedia conferencing and voice-data integrated networks, the researcher suggests.

"The real key for Internet telephony deployment is when the gateways move form adjunct equipment to become an integral part of the communication infrastructure," said telecommunications industry analyst Kiran Khanna. "When the gateways are able to route between the public switched telephone network and the Internet ... Internet telephony use will take a major step forward."

However, it won't all be a smooth ride, according to the researcher.

"Revenue growth will be restrained by the lower sound quality of Internet telephony as opposed to public-switched telephone networks, and by the lag in ISPs' and corporations' infrastructure upgrades," said Frost's telecommunications analyst Francois Eric De Repentigny.