When voice over Internet protocol (VoIP) first appeared, advocates thought that, driven by huge cost advantages, it would overwhelm the antiquated — and more expensive — landline market. It did not happen.

But now, according to a new report from In-Stat, "IP Phones Invade the Home and Office," the mass migration to IP-based phone services is finally beginning — in both the business and consumer markets.

Even though VoIP adoption is currently lagging, In-Stat predicts the growth of IP phones will accelerate significantly beginning in 2008. In fact, total IP phone annual shipments will grow from 10 million units in 2006 to 164 million units in 2010.

"The migration to IP phones will coincide with the adoption of next-generation business and consumer applications such as presence-enabled calling features," said In-Stat analyst Keith Nissen. "Except for traditional business corded IP phones, wireless models will predominate."

The following trends and predictions are what could make headlines in 2007:

  • Competitive Practices: We could possibly see the beginnings of VoIP "walled gardens" by the Internet Access Providers, who may start to block VoIP calls from major VoIP providers and only open channels for their own services in an attempt to regain and build revenues from voice services.
  • Consolidation/Partnerships: Major Internet players such as Yahoo! and Google, will continue to develop key strategic partnerships, merge with or acquire Internet Access Providers to secure access and enhance services with their VoIP offering. Pure play VoIP providers may be squeezed from the market or most likely become acquisition targets.
  • Broadband Penetration: Broadband will continue to grow aggressively throughout the world and continue to fuel the availability of VoIP services to residential customers.
  • Wireless: Wireless will continue to grow in leaps and bounds and the pending 3G roll-out will be the catalyst for Mobile Operators to embrace VoIP services, as the most effective technology to bring mobility and increased connectivity between businesses mobile and fixed PBX extensions. VoIP will also begin to erode the "Roaming" premiums, due to the growth of WiFi and integrated networks.
  • Session Initiation Protocol (SIP): SIP will likely become the standard delivery mechanism for VoIP calls, threatening the position of traditional PBX manufacturers, as SIP enables Internet Access Providers a standard upon which to offer even more cost effective, hosted, and feature-rich services.
  • IP Transit Exchanges: The possible emergence of IP Transit Exchanges will handle and balance traffic across the internet and enable things like the interconnection of different VoIP services. It will also mean better management of the Internet so that quality of service will improve so much so that there will no longer be a need for companies to require private dedicated bandwidth making call quality and speed per dollar a better deal. Ultimately this means that the internet will be more usable and will bang another nail in the coffin of traditional telephony. This may not all happen during 2006 though and would be a trend to watch for the next 5 years.
  • Regulatory Threats: VoIP service providers will likely do an increasingly better job of working with solutions providers and national and local 911 authorities, as well as becoming compliant with the 1994 Communications Assistance for Law Enforcement Act (CALEA). Other traditional voice service regulatory standards will be increasingly applied to VoIP providers and may level the playing field a bit.
  • Video/Multimedia: VoIP, which is capable of being more than simply telephone technology, may become effectively capable of providing an even greater set of feature-rich multimedia services that provide audio, full-motion video and other multimedia communications services such as video conferencing.