Yankee Group Expects Alternative VoIP Providers To Lose 47% Market Share to MSOs and IXCs/ILECs by the End of 2005

BOSTON--(BUSINESS WIRE)--Nov. 1, 2004--

As major players accelerate their roll-out strategies, alternative VoIP providers will feel increasingly squeezed and pricing pressure will intensify

“While alternative VoIP providers such as Vonage and many of the Vonage-like providers have a first-to-market advantage, their lead will be short-lived”

In the coming year, local VoIP providers will be facing the communications market leaders: AT&T, Verizon, Comcast and Time Warner. Delivering primary-line voice service is a very resource-intensive effort. According to the Yankee Group report, Fighting Goliath: Can Alternative VoIP Providers Survive?, the MSOs are bringing VoIP to the mass market as a primary-line replacement. Incumbent local providers look to VoIP as a long-term network development strategy; regardless of interim activity, VoIP is part of their future.

"While alternative VoIP providers such as Vonage and many of the Vonage-like providers have a first-to-market advantage, their lead will be short-lived," says Kate Griffin, Consumer Technologies & Services senior analyst. "In 2003, a number of these companies, dominated by Vonage, introduced VoIP phone service to consumers. At the end of 2003, these small startups comprised nearly 66% of the local residential VoIP market. Vonage dominated the market with more than 90% of all the subscribers in the alternative VoIP provider segment, or 61% of the local residential VoIP market."

"However, alternative VoIP providers lose market share every day to the major players. MSOs, IXCs and ILECs are joining the VoIP game, and their available resources dwarf even the largest of the alternative VoIP providers. The local VoIP market is already crowded with more than a dozen players vying for local consumers," says Griffin.

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THE YANKEE GROUP (http://www.yankeegroup.com)

The Yankee Group is the global leader in communications & networking research and consulting. The company helps businesses understand the opportunities, risks and competitive pressures of developing, deploying and consuming products and services that drive communication or information exchange. Now in its fourth decade, the Yankee Group is based in Boston with offices throughout North America and Europe.