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VoIP takes off

Internet telephony is ready to hit the big time in the UK, thanks to a surge in broadband uptake and the introduction of devices that don't require a PC
Written by David Meyer, Contributor

Ten percent of UK households are now using various forms of Internet telephony, thanks to the runaway success of broadband.

According to a report into the communications market published by regulator Ofcom on Thursday, more than 1.8 million households were using VoIP in May 2006. Much of the uptake is being driven by new devices that enable people to use Voice over Internet protocol (VoIP) without having to turn on their PC.

Such devices include Vonage's handset, which plugs directly into an ADSL-enabled wall socket, and BT's Home Hub, which allows users to connect any handset directly into the IP-driven media hub itself.

Ofcom's estimates indicate that around 300,000 households use BT's VoIP services, with about half that number using Orange's offerings (recently rebranded from Wanadoo). Usage estimates for other services such as Skype and Vonage were difficult to make, Ofcom said, because "voice traffic sent over the Internet looks similar to any type of data".

"VoIP has now got a substantial presence — 10 percent of households are using it in some way or another," said Ed Richards, Ofcom's chief operating officer, on Thursday.

The UK's rapid adoption of broadband will drive VoIP uptake even higher, predicted Ofcom's competition policy director Andrew Heaney, who noted that "one of the drivers of VoIP taking off will be other operators coming in and launching LLU [local loop unbundling — the process by which BT's rivals are allowed to install their own equipment in BT's exchanges rather than renting infrastructure from the incumbent]".

The LLU process was forced into action by Ofcom itself in 2004 in a drive to break up BT's infrastructure monopoly, reducing costs for providers and their customers.

Forty-four percent of the population are now connected to an LLU-enabled exchange, the report said. Overall, more than 11 million households had broadband, an increase of a million in one year, with the numbers on dial-up continuing to drop — although six million households still connect to the Internet through their phone lines. It is worth noting that Ofcom still defines broadband as any "always-on" service providing a bandwidth greater than 128kbps, even though many operators are providing speeds of 2Mbps and more.

Broadband uptake was being further boosted by the appearance of so-called "free broadband" offers from the likes of Carphone Warehouse and Orange, which were forcing prices down "precipitously", Richards said.

However, while VoIP is clearly becoming increasingly popular in the UK, Richards also pointed out that it was "proportionately less attractive" here than in countries such as France, where the cost of making traditional telephone-based calls is higher, thereby driving the market for cheaper alternatives over the Internet.

The report also pointed out several current issues that VoIP has to address, the most important being reliability. As VoIP is dependent on both mains power and a working broadband connection, it does not yet match the "failsafe" nature of more traditional phone connections, which draw their power from the central exchange.

Other problems include quality of service and the availability of emergency access. Most VoIP services do not yet offer access to emergency numbers such as 999 and, even if they did, the emergency services on the other end of the line would not able to automatically locate the caller as they would if called from a non-VoIP connection.

The appearance and possible future threat of SPIT (Spam over Internet Telephony) was also noted in Ofcom's report.

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