Cost-Saving ICT Solutions

by Grant Seiffert, Telecommunications Industry Association (TIA) President

It’s clear that the recession is at the top of everyone’s mind these days. As we look for cost-effective ways to position our companies for the next growth cycle, and balance our checkbooks at home, I invite you to consider some information and communications technology (ICT) industry solutions.

Voice over Internet Protocol (VoIP) provides cost savings—to both businesses and home users. Companies using VoIP also can benefit from improved productivity that Unified Communications (UC) provides, allowing messages received in one format to be retrieved through another.

Because VoIP does not require circuit-based switching, service providers entering the market can offer deep discounts because they do not have to maintain expensive networks. Additionally, cable companies are able to offer VoIP as part of bundled services with attractive monthly rates.

Let me share some specific details gathered from TIA’s just-released 2009 ICT Market Review & Forecast:

• In 2008, the average VoIP subscriber paid $28 per month for telephone service, well below the $48 per month average for circuit switched lines.

• Average monthly VoIP spending of $57 in 2008 was little more than a third of the $150 average for business circuit-switched lines.

• TIA’s analysts predict that the overall residential VoIP market will rise from 17 million subscribers in 2008 to 31.5 million in 2012, growing at a lively 16.7 percent compound annual rate.

• By 2012, we predict VoIP revenue will total an estimated $36.9 billion for a compound annual increase of 16.9 percent compared with 2008.

As economic conditions improve and as cost savings become less of a factor, we predict the VoIP market will continue to grow. F or home users, enhanced features such as caller ID, voice mail and call forwarding, standard with VoIP subscriptions, will keep the market surging. Improved call quality also factors in. VoIP calls over managed networks are virtually indistinguishable from calls made over traditional circuit-switched networks.

Concerns about VoIP connections to the emergency networks have also been addressed. Enacted last July, the New and Emerging Technologies 911 Improvement Act of 2008 gives VoIP providers the right to interconnect to the 911 network and provides the liability protection enjoyed by circuit-switched and wireless operators as long as they offer automatic connectivity to a Public Safety Answering Point. The F CC also ruled that VoIP traffic can be given priority over other Internet traffic.

Investment in broadband and network infrastructure will also benefit VoIP and UC technologies that run over broadband. More than $7.2 billion have been allocated for broadband stimulus in the American Recovery and Reinvestment Act of 2009, which will help to serve consumer demand for more bandwidth and faster downloads for data and video at work, at home and on go.

The ICT industry is an engine for growth. VoIP and UC are proof of that. As president of TIA, I foresee a vibrant and brilliant future. Not many other industries can even point to areas such as VoIP and UC where things are clicking now despite the recession. Investment in broadband will help to maintain ICT growth and enable other industries to take advantage of future cost savings and new applications as these technologies and others in development grow more robust to meet next-generation demands.

For home users, enhanced features such as caller ID, voice mail and call forwarding, standard with VoIP subscriptions, will keep the market surging.