VoIP prepaid card market propelled by cheaper international rates

With voice over Internet protocol (VoIP) offering a more cost-effective alternative to public-switched long distance calls, the market for prepaid VoIP calling cards is expected to surge.

With voice over Internet protocol (VoIP) offering a more cost-effective alternative to public-switched long distance calls, the market for prepaid VoIP calling cards is expected to surge.

This has propelled the VoIP Calling Market to generate revenues of US$1.27 billion in 2000 and this is projected to increase rapidly to US$21.9 billion by 2007, according to a new report on World Prepaid VoIP Calling Card Market released by Frost & Sullivan.

“By 2007, VoIP calling cards will account for more than 75 percent of all calling card traffic,” says Frost & Sullivan Industry Analyst EIka Popova. “Towards the end of the forecast period, VoIP calling cards will grow at a higher rate than those for public switched telephone network.”

Compared with PSTN cards, VoIP calling cards offer more competitive rates, especially on international calling routes. Prepaid service is expected to be increasingly popular with immigrants, students, and travelers in the United States and Western Europe.

While prepaid VoIP calling cards are less prevalent in European and Latin American markets, it is extremely popular in the Asia Pacific and North America regions.

"Growth in VoIP calling card traffic will be fueled by penetration into less developed and currently highly regulated regions, such as the Middle East and Latin America," states Popova. "In recently deregulated markets, VoIP calling cards will provide small, new entrants with the possibility to deploy services fast and to compete effectively by undercutting incumbent calling rates."

Prepaid VoIP Calling Card Markets by Region/Millions of Minutes

Despite all the good news, VoIP calling cards are bound to remain a small market. Increasing penetration of mobile communications and falling PSTN rates will significantly hamper growth in VIP calling card services.

"Another market challenge is that "VoIP calling cards will eventually lose their price advantage in the long term to other telephony solutions," warns Popova. "It is unlikely that service providers will be able to offer enhanced services that will allow them to charge premium prices and expand their customer base."

Click here for more stories on VoIP

Newsletters

You have been successfully signed up. To sign up for more newsletters or to manage your account, visit the Newsletter Subscription Center.
See All
See All