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CPE-based Voiceover IP Slowed by Recession
Published: 6/22/2009
One of the fastest growing voice technologies is CPE-based Voiceover IP (VoIP). In this implementation, businesses install the required equipment at their site. Their Internet access connections provide communications with the rest of the world. Typically, medium-size and larger businesses take advantage of this technology to lower their operating cost, but the up-front cost is not trivial. Implementation has slowed remarkably as the recession has ruined corporate profits, devastated employment, and shelved many investment plans.
Prior to the recession, business investment in CPE-based VoIP grew rapidly as organizations strove to reduce their total communications costs. Very high year-over-year growth rates signaled the rapid adoption of this new voice technology. Indeed, investment appeared on track to continue at double-digit growth rates throughout 2009 and into 2010. But the recession derailed that momentum, driving year-over-year growth drops well below 5%, touching the 3% mark briefly in late 2009. As the recession ends and economic growth resumes—although slowly—businesses will revive some of their plans for CPE-based VoIP and year-over-year growth accelerates to over 7% by late 2011.
The growth gap imposed by the recession eliminates nearly one million CPE-based VoIP voice connections in the business market throughout the United States. This benefits telecommunications service providers, who retain nearly a million basic access lines, as well as the revenue and profit associated with those lines, rather than watch these lines migrate to a competing technology. This hurts the IP-PBX, VoIP gateway, and IP telephone producers, who have seen product sales slow sharply. It will take years for the lost VoIP connections to reappear; ultimately, they will as businesses continue to pursue cost advantages to improve their competitive positions in their markets. To date, nearly five million basic access lines have been replaced or displaced in the business market with CPE-based VoIP. That number will climb to nearly six million in 2012.
CPE-based VoIP Lines in Business
(Year-over-Year Percent Change)
Among the broad industry segments in the U.S. economy, business services, financial services, government, and healthcare have been the biggest users of this voice technology. Healthcare stands out among the large users as the segment that continues to adopt CPE-based VoIP at high rates through most of 2009 and 2010. Other industry segments are hampered by harsh economic realities for the short term.
CPE-based VoIP Lines in Business by Segment
(Year-over-Year Percent Change)
2009 | 2010 | |||||||
Industry | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 |
Construction | 0.9% | -1.3% | -2.6% | -4.6% | -1.2% | -0.8% | 0.3% | 3.3% |
Education | 13.1% | 10.1% | 8.8% | 6.7% | 10.0% | 9.8% | 8.6% | 6.9% |
Financial | 9.3% | 8.2% | 6.1% | 4.7% | 5.1% | 4.9% | 5.5% | 6.0% |
Government | 12.8% | 10.4% | 8.1% | 5.9% | 6.2% | 6.2% | 6.5% | 6.8% |
Healthcare | 14.4% | 12.2% | 10.0% | 8.1% | 8.8% | 8.9% | 9.2% | 10.2% |
Information | 7.2% | 4.8% | 2.2% | -0.6% | 1.2% | 2.8% | 3.7% | 3.8% |
Leisure & Hospitality | 10.4% | 7.9% | 6.0% | 4.2% | 4.5% | 4.9% | 4.5% | 4.9% |
Manufacturing | 8.0% | 6.2% | 3.5% | -0.4% | 2.2% | 3.2% | 3.4% | 3.3% |
Natural Resources | 11.5% | 3.6% | -1.0% | -6.7% | -1.6% | 1.7% | 2.1% | 4.2% |
Other Services | 10.8% | 9.1% | 7.5% | 6.9% | 6.9% | 5.8% | 4.7% | 3.9% |
Business Services | 8.4% | 6.6% | 4.0% | 2.0% | 4.5% | 5.9% | 7.9% | 10.0% |
Retail Trade | 8.0% | 7.1% | 5.6% | 3.4% | 2.3% | 1.7% | 2.4% | 3.3% |
Transportation | 10.7% | 8.7% | 5.9% | 1.9% | 3.6% | 4.7% | 6.0% | 7.9% |
Utilities | 10.3% | 8.8% | 7.9% | 6.5% | 7.5% | 5.8% | 4.4% | 4.1% |
Wholesale Trade | 6.1% | 4.2% | 1.2% | -1.4% | -0.2% | 0.4% | 1.6% | 2.9% |
For more information, please refer to our Information & Communication Technology Data & Forecasts page at http://www.globalinsight.com/ProductsServices/ProductDetail2371.htm
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