Fitch Ratings Increases Estimates of U.S. VoIP Growth

Fitch Ratings has increased its forecast for the number of Internet protocol (IP)-enabled phone lines by 2008 to approximately 16.2 million total lines. This represents a 59% increase from Fitch's May 2004 estimate of 10.2 million IP lines. The primary reason for this revised estimate is that the potential customer base for IP phone service has expanded. This expansion is facilitated by the Regional Bell Operating Companies (RBOCs) availability of "naked" Digital Subscriber Lines (DSL), aggressive cable multiple system operator (MSO) deployments, pricing and promotional packaging, and continued favorable regulatory treatment.

Fitch estimates that the overall target market for retail IP phone services is approximately 74 million access lines, representing non-lifeline retail consumers and single line business customers. Fitch believes that the 16.2 million line erosion represents approximately $8.2 billion of revenue and $4.5 billion of EBITDA to the incumbent local exchange carriers (ILECs). Therefore, ILEC competitors, especially cable MSOs, have a material growth opportunity for these services.

"VoIP will significantly erode financials surrounding traditional voice services for the ILEC industry, but this erosion will be offset by continued strong wireless growth," said Michael Weaver, Managing Director, Fitch Ratings' Telecom and Cable Team. "Fitch estimates that wireless services will contribute incremental growth to Verizon, SBC and BellSouth of at least $33 billion of revenues and $12 billion of EBITDA by 2008."

Wireless results for 2004 for Verizon, SBC and BellSouth demonstrated a revenue increase of more than $7.5 billion and an EBITDA increase of nearly $2.6 billion, adjusting for the acquisition of AT&T Wireless by Cingular Wireless. Furthermore, ILECs can expect greater levels of profitability from DSL services, as they continue to increase penetration and spread fixed costs over a larger base of subscribers. Therefore, while it is important to recognize the potential of VoIP services, it is also necessary to balance that effect against the numerous other variables affecting the telecommunications industry.

Author:  

Email:    

Topic:    

Content:

Related Voip Articles

• Dagda Mor Media Launches VoIP Business Weekly using Cadmus 3Path(TM) Digital Content Delivery Solution
  21 May 2005



• Vonage(R) Agrees With SBC and BellSouth to Purchase Nomadic VoIP E9-1-1 Service
  20 May 2005



• Nomad International Inc., a VoIP Technology Provider, Comments on CRTC Ruling
  20 May 2005



• General Components Provides VoIP Enterprise Solution to Motorola China
  19 May 2005



• tekVizion Sponsoring and Speaking at VoIP Security Workshop
  18 May 2005



• VoIP is Top Priority for Government Organizations in 2005, According to New Network General Survey
  18 May 2005



• Band-X Selects NexTone's iVMS Management System for Advanced VoIP Interconnects and Partitioning Capabilities
  18 May 2005



• Pac-West Telecomm Provides E911 Capabilities to VoIP Providers
  17 May 2005



• BroadSoft Platform at Core of Unient's Turnkey Wholesale VoIP Service for European Carriers
  17 May 2005



• VoIP Inc. Advances $475,000 Dollars and Signs Letter of Intent to Acquire Caerus, Inc., Volo Communications and Other
  16 May 2005