US VoIP Gains Mean RBOC Pain

May 19, 2008

[Press Release] New data from TeleGeography reveal that voice over IP (VoIP) telephone service, which was only recently a novelty, is now commonplace in the U.S. By the first quarter of 2008, 16.3 million consumer VoIP lines were in service, representing 13.8 percent of all U.S. households, and 27 percent of broadband households.

While VoIP services are growing fast, incumbent phone companies, particularly the three Regional Bell Operating Companies (RBOCs), AT&T, Verizon and Qwest, are hemorrhaging traditional fixed-line subscribers. Since the start of 2005, the RBOCs have lost 17.3 million residential telephone lines, while VoIP service providers have gained 14.4 million new customers. More than 80 percent of these new VoIP subscribers use the services of cable companies, which have achieved remarkable subscriber growth by offering VoIP as one component in a triple-play bundle.

RBOC Line Losses versus VoIP Gains

"VoIP service providers' growth has largely come at the expense of the old phone companies," observed TeleGeography analyst Patrick Christian.

Incumbent phone companies are responding to the new challenge by launching their own triple-play offerings. Verizon had over 1.8 million subscribers to its FiOS fiber-optic Internet service, and 1.2 million FiOS TV subscribers in Q1 2008. AT&T is upgrading its broadband network to offer broadband, video and VoIP telephone service under the brand name "U-verse." At the end of Q1 2008, AT&T had 379,000 U-Verse broadband and video subscribers, including 4,000 VoIP subscribers.

The U.S. VoIP Research Service has been discontinued. For a full list of TeleGeography’s research services, please visit http://www.telegeography.com/research-services/.