VoIP 'will cut into telecom companies' profits' header image

Published: 2nd Nov 2012

The increased use of Voice-over-Internet Protocol (VoIP) services will impact upon the profits of telecommunications companies all around the world.

This is according to Ovum, which believes global phone network providers will lose out on $479 billion (£298 billion) by 2020 because of the emergence of the web-based technology.

VoIP allows speech to be converted into a digital signal that is transmitted over an online network before being converted back at the other end of the line.

It has proven particularly popular among businesses to date because it is a lower cost alternative to standard telephone calls.

While Ovum accepts that the protocol won't completely replace traditional telephone systems, it is definitely changing the way people communicate.

"The major threat posed by OTT [over the top] VoIP is that it weakens customers' attachment to their telephone number and transfers their attachment to a new address," commented Jeremy Green, principal telecoms strategy analyst at Ovum.

Written by Justin McKenzie