New revenue killer rears its head
The beleaguered telecoms industry has another item to add to the list of forces undermining its voice revenues. Voice over internet protocol (VoIP) has been identified as the next revenue killer to attack this sector. In the US, people are talking about how IP is about to hit the fan.
Its significance cannot be ignored and it raises the question whether the telecom industry is heading for another structural dilemma.
VoIP now has a firm place next to regulatory issues, 3G and mobile phones even though this latest threat has been around for a decade. VoIP has mainly been used within the circles of computer fanatics and, in simple terms, is about making voice calls over an the internet. According to Roger Appleyard, senior credit analyst for telecoms at ABN Amro, fear of this intruder is being kept under control as mass revenue loss will not be an issue in 2004. But "beyond 2004 it will have an impact on credit profiles of telecommunication companies," he says.
Various markets are already responding. Andrew Entwistle, telecoms analyst at New Street Research, says it is having a varied effect on each market.