VoIP on a steep trajectory

Calling voice-over-IP providers’ momentum a furious assault on the fixed-line voice market in the U.S., research firm TeleGeography reported today that VoIP providers gained 1.23 million subscribers in the second quarter.

Although the rate of growth actually slowed in the quarter, TeleGeography attributed that to the sheer size of the subscriber base, which now stands at approximately 6.9 million. That 153% more than last year at this time.

VoIP revenue has also grown. Over the past 12 months it has increased 173% to $607 million.

Late to the party, but wearing the right dress, Comcast beat all other providers in the quarter by acquiring 305,000 new VoIP customers. The cable provider is still in fourth place with 721,000 lines in service as Vonage picked up another 243,000 lines to reach 1.8 million, Time Warner Cable grew by 234,000 lines and is now at just under 1.6 million, and Cablevision grew to 987,542 lines—an increase of about 122,000 in the quarter.

At the 73% growth rate it enjoyed this quarter, Comcast could pass Cablevision as the No. 3 provider in the fourth quarter. Financial analysts must believe the cable providers will get the jump on Vonage soon as well, as they maintain their sell rating on the company despite Vonage Holdings Chairman Jeffrey Citron buying $1.26 million of the company's stock for less than $7 yesterday. The stock debuted at $17 in its initial public offering three months ago.

Smaller players in Vonage’s category, which TeleGeography calls pure-play enhanced service providers, as opposed to cable providers, are much further down the scale of new subscribers. The second largest ESP, 8X8 had 151,000 subscribers at the end of the second quarter. SunRocket added 48,000 lines in the quarter to reach 130,000. SunRocket would overtake 8X8 in the third quarter if its growth rate continues.

However, cable providers have claimed a 60% market share after their late start behind the ESPs. TeleGeography doesn’t see an end to their momentum. However, the firm does see some necessary investment required in the future for these players as there is a lot of circuit-switched infrastructure in their networks.

As for the ILECs, they are losing about 30,000 lines per day each, according to the report. The top five ILECs lost 2.6 million switched access lines in the quarter. However, they were not all lost to VoIP providers. Wireless and second-line loss still accounted for the majority of access line loss.

TeleGeography says U.S. VoIP subscribers will reach 9.8 million by the end of the year and will generate $2.6 billion in revenue—more tan double the revenue from 2005.

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