India Telecom

June 9, 2003
VoIP to grab 61 percent of ILD traffic by 2007

NEW DELHI -- A recent study by iLocus on the VoIP in India revealed that VoIP is set to grab around 61 percent of the international long distance (ILD) traffic by the year 2007.

VoIP was legalised along with the deregulation of the ILD market in India on 1 April 2002. Some 220 million minutes of ILD (including incoming as well as outgoing) were shipped over VoIP equipment from April-December 2002, accounting for about 6 percent of the overall ILD traffic last year. VoIP traffic is likely to touch 7.1 billion minutes (incoming plus outgoing). VoIP gateways had handled over 90 million minutes of ILD traffic by March 2003.

Data Access leads in terms of VoIP usage among the service providers, while VocalTec tops the vendor list. iLocus estimates VocalTec's market share at 67 percent for equipment, and 83 percent in terms of ILD traffic over VoIP gateways in India.

Another interesting development in India is the PC-to-phone market. According to the iLocus report, the Indian ISPs originate around 6 million minutes of PC-to-phone traffic. Caltiger leads with 23 percent share. The report estimates April-December 2002 PC-to-phone traffic at 35 million minutes, which is likely to grow to 211 million minutes by 2007. Net2phone leads with 62 percent share among PC-to-phone vendors.

Although having better prospects in the enterprise market, due to the government restriction of its use in a closed user group, VoIP has not yet realised its potential in enterprises. On the other hand, PC-to-phone and the use of VoIP in ILD wholesale has flourished. Table I highlights the estimates and forecasts.

(Source: iLocus)
*Outgoing as well as incoming traffic. Includes 'grey' minutes.

Lack of bandwidth limits PC-to-phone growth

The PC-to-phone market has shown a modest volume of some 35 million minutes from April-December 2002. However, this growth has been limited due to the lack of sufficient bandwidth. Among the Indian ISPs, connectivity to the US backbone is not as extensive as in case of the UK and continental Europe. Traditionally, peering with European carriers is more common. On the contrary, nearly 50 percent PC-to-phone traffic goes to the US. An additional problem associated with the lack of sufficient bandwidth is the slow downloading speeds for the dialer. Unless consumers have invested in a prepaid card, they often tend to give up. Due to dialer downloading problems, Web-based clients seem to be more popular.

Regulation is another factor holding up PC-to-phone prospects. Though in use in India before being legalised by the government, it was limited to users with credit cards and those having access to 'grey' prepaid cards. Legalising Internet telephony has slightly lifted the PC-to-phone prospects as consumers can openly avail of the service. The general populace now has access to prepaid cards. However, there are still major limitations as to what a user can do. An enterprise user cannot, for instance, use VoIP outside its user group. A residential user cannot call within India using PC-to-phone. Allowing domestic long-distance calls will boost growth of PC-to-phone services in India.

The ISP often has less control over PC-to-phone billing on the India end. Typically, it can set one uniform percentage margin over and above the entire wholesale rates. Individual margins on individual routes are rare. Billing flexibility is even more acute for second tier reseller such as STD booths. These booths typically cannot cut bills for individual PC-to-phone calls.

Apart from the success in ILD and PC-to-phone markets, VoIP players are counting on call center companies and basic service operators (BSOs) to deploy VoIP. Call centers are benefiting from IP-based call center solutions by integrating voice, mail and data functions. BSOs are looking into IP Centrex offering based on VoIP technology as well.

Contact:
iLocus
Web: www.ilocus.com