Show Us the Money

VoIP Remains Popular but Free Services Dominate

Sydney , AUSTRALIA – 12 February 2007 — As Australia’s VoIP population tops one million subscribers, independent local analyst firm Market Clarity warns that revenue generation must become a priority for the VoIP service provider market.

Launching the latest in the company’s Market Tracker series of forecast and analysis publications, Market Clarity founder and CEO Shara Evans said the growing user population of free VoIP services masked a relatively low penetration of paid services

“While increased customer loyalty may justify a free VoIP service for ISPs or telecom service providers, pure-play VoIP providers need to work on revenue generation,” Evans said. “Even though Internet-based VoIP are expected to generate revenue of close to $85 million in 2006-2007, this represents very low ARPU for a population which will approach 1.4 million users in the same period.”

Market Clarity is forecasting a total of 4.8 million business and residential Internet-based VoIP services in operation by June 2011. This user base will contribute a very a small proportion of total telecommunications revenue.

Other findings in Market Tracker — The VoIP Services Market: 2004-2011 include:

• Of Australia’s 1.1 million Internet-based VoIP services in December 2006, only 230,000 were paid services.
• More than half of the revenue generated by Internet-based VoIP services in 2011 will come from business users.
• The more lucrative “private network” VoIP service market will reach 730,000 services by 2011, with close to 90% of revenue attributed to business customers.

The future direction of the VoIP services market will also be driven by the entry of larger players, Evans said. “As more and more tier-one carriers launch VoIP services alongside their existing telephony services, VoIP services growth is certain to accelerate,” she explained. “However, some of that will be at the expense of smaller pure-play VoIP providers.”

“To ensure their long-term growth, it’s imperative that VoIP players get their revenue strategies in place today.”

The report also documents the growing importance of the Hosted IP Telephony (IP Centrex) market. With revenue of over $118 million in 2006, this market is worth more than twice the Internet-based VoIP market. By 2011, Hosted IP Telephony could become a powerhouse worth more than $750 million per annum.

“Hosted services prove the value of the business customer to the VoIP market,” Evans said. “Opportunities for new Internet-based VoIP service launches will be limited in the future, but Australia’s Hosted IP Telephony market will offer plenty of opportunity for smart, capable operators for some time yet.”

Market Tracker — The VoIP Services Market: 2004-2011 is based on data collected from private interviews with 34 VoIP providers representing more than 90% of Australia’s VoIP market (as measured by subscribers). It includes research covering subscribers and revenue in the residential and business markets, as well as breakdowns of free and paid VoIP services, retail and wholesale VoIP services, and a detailed analysis of the wholesale and retail Hosted IP Telephony (IP Centrex) market.

About Market Clarity

Market Clarity is an award-winning telecommunications analyst firm founded in January 2006 by leading Australian telecommunications researcher and strategic consultant, Shara Evans. The firm covers all aspects of telecommunications, including traditional and converged services and technologies. Market Clarity’s extensive databases of technical and market information cover a wide range of facts and figures on the technologies and services that are shaping the Australian telecommunications market. Market Clarity’s GIS tools and research databases enable the correlation and presentation of highly complex information in an intuitive geographic (map) format.

Market Clarity’s insights are derived from a deep understanding of technology, coupled with comprehensive research, which examines each segment of a service’s value chain as well as underlying population demographics. By leveraging its engineering knowledge with an ongoing primary research program, Market Clarity provides insight, intelligence and advice on all aspects of the Australian telecommunications market including traditional, converged and future technologies. Market Clarity’s unparalleled market knowledge and research databases are brought to all consulting engagements.

Market Clarity’s contribution to telecommunications in Australia was recognised by the telecommunications industry’s peak body, the Communications Alliance, which awarded the company its 2007 ACOMMS award for Services to the Industry – Professional Services.

Market Clarity is headquartered in Sydney, Australia.