Will computer-based voice communications services like Skype eliminate the need for international carriers? Not anytime soon, according to data presented in the TeleGeography Report and Database.

Computer-based Voice over IP (VoIP) is nothing new, but Skype is the first such service to break into the mainstream, attracting millions of users worldwide. Skype had 1 million simultaneous users within six months of the release of its first version for Windows in July 2004. By the end of the third quarter of 2006, Skype had 136 million registered users, and the number of users online now regularly exceeds 8 million. These users generated about 6.6 billion minutes of traffic in the third quarter of 2006, and are on track to make over 27 billion minutes of PC-to-PC calls this year. About half of Skype’s traffic is international.

This has prompted worries that Skype–and similar services–could undermine the viability of the international long-distance market. However, while the volume of international traffic routed via Skype is significant, the quantity is still small when compared to a global switched and VoIP traffic base of 264 billion minutes. Computer-to-computer traffic between Skype users in 2005 was equivalent to 2.9 percent of international carrier traffic in 2005 and approximately 4.4 percent of total international traffic in 2006. Furthermore, not all of Skype’s traffic is a net loss for international carriers. Skype also offers a paid “Skype Out” service, which allows Skype users to place calls to traditional telephones. The service relies on wholesale international carriers, including iBasis, Cable & Wireless, and Level 3, to terminate this traffic to the telephone network.

Still, it’s clear that VoIP services will continue to gain in popularity. “Someday, all calls will be routed over the Internet,” commented Stephan Beckert, Research Director at TeleGeography. “But the numbers suggest that traditional international carriers aren’t going to disappear anytime soon.”

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In the late 1990s, scores of metro service providers based their business plans on the assumption that bandwidth limitations on metropolitan area networks (MANs) was the major bottleneck to higher-capacity long-haul networks. By constructing new MANs, these providers hoped to release constrained demand for intra-city services that would also drive more traffic onto overbuilt long-distance routes. Today, it’s clear that the construction spree that followed replaced the metro bottleneck with a considerable metro fiber surplus, which despite many consolidations, persists through 2006. Considering these developments, is there any hope on the horizon for providers of metro fiber and bandwidth services?

TeleGeography’s enhanced Metropolitan Area Networks Database (MANs) seeks to answer this difficult question by surveying metro service providers worldwide. The research examines the role MANs play between local and long-distance networks and then details shifts in metro market landscapes from both an operator and product/services perspectives. By quantifying provider data, MANs delivers up-to-date primary research to identify potential market opportunities in more than 560 cities worldwide.

While surplus concerns should alarm providers, there’s opportunity in markets where enterprises demand a broader mix of services. “Product mix on developed metro networks is moving more and more toward Ethernet and managed services to accommodate the burgeoning enterprise network market,” states Eric Schoonover, Senior Research Analyst with TeleGeography. The company’s recently released Enterprise Network Pricing Service has also helped quantify this shift. According to Robert Schult, TeleGeography’s Director of Pricing Research, “Carriers are offering customized data services that accommodate the specific requirements of today’s demanding corporate applications. By matching configurations to performance requirements, they deliver services that are not easily replicated and help to preserve margins.” The following graph highlights the expanding product mix being made available across global providers.

Tying together TeleGeography’s research on long-haul networks and colocation facilities, MANs catalogues critical city connections worldwide and provides a market-by-market review of local networks. The enhanced directory of providers that is now searchable by company, metro region, and location (i.e. building) acts as the ideal buyer’s guide for those needing to purchase metro services or realize market potential by offering the right products. Online access to this regularly updated database provides information to over 1500 profiles of metro area networks that cover over 180 companies.