130K VOIP subscribers in 2003, 17.5 mln by 2008

In 2003, the residential local VoIP market grew more than tenfold from about 10,000 local phone subscribers to more than 130,000 by year end. Today, Vonage, an alternative voice provider, largely dominates the industry. However, U.S. MSOs have been a driving force in the VoIP industry. Starting in 1997, some U.S. MSOs began to familiarize themselves with telephony deployment and marketing using legacy circuit-switched solutions. Although margins in this business have been low for some operators, voice remains a crucial element of their bundles and these MSOs are counting on VoIP to carry their telephony strategies forward.

2004 will see the start of major mass-market VoIP launches in the United States. By 2005, most of the major MSOs will begin mass-market deployments. By the end of the decade, traditional incumbent providers will begin migrating plain old telephone service (POTS) customers to their IP networks. Driven by these major deployments, the Yankee Group estimates 17.5 mln U.S. consumers will subscribe to a VoIP local phone service by 2008.