VOIP leads the way as service revenues ramp up

According to the latest data from Point Topic broadband value added services generated $25.7 billion worldwide in 2007, an increase of 62% on 2006.

“Value added services are growing strongly and are increasingly significant in overall revenue terms,” says John Bosnell, Senior Analyst at Point Topic.

“We estimate that value added services were 10% of total broadband revenues, which includes subscriptions, in 2003 but by the end of 2007 that has increased to over 30%. As it gets harder to make a profit in the hyper competitive line rental market the operators and suppliers have to look to add value, and revenue, with their service offerings,” he continues.

Where does the money come from?

56% of the service revenues generated worldwide come from the combination of voice over IP (VOIP) and security. They are followed, in order of global revenue generated by online gaming, home networks, music downloads and video over broadband.

“The success story of 2007 has been VOIP. Overall revenue has very nearly doubled, average revenue per user (ARPU) is up and take-up in major markets, particularly North America and Western Europe is growing quickly,” says Bosnell.

Point Topic splits VOIP into two segments, IP Telephony which means VOIP provided by ISPs and Internet Telephony, which includes services like Skype which route through the user’s PC.

“It’s difficult to measure active users of the Skype and its cousins, like the applications embedded in the popular instant messaging services, but our estimates put the worldwide number of active users at around 20 million,” he continues.

Whilst the ARPU is relatively low on these services, IP Telephony on the other hand produces around 10 times as much revenue per user. But it’s not a bottomless well. At the end of 2007 for example VOIP accounted for 27% of fixed lines in France, many served via bundled deals. Market saturation is still some way off but not out of sight.

“We expect VOIP to continue to grow strongly in the next few years and in combination with other value adds, particularly IPTV, global revenues should continue to grow,” concludes Bosnell.

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For more information and associated charts and tables, please contact:

Point Topic: Oliver Johnson
Email: oliver {at} point-topic(.)com
Tel. +44 (0) 20 3301 3303

About Point Topic

Point Topic is an analyst company focusing entirely on broadband. Point Topic’s international services have a global reputation for providing the most up-to-date and authoritative user statistics, supplier profiles and applications reports on DSL, FTTx, cable and other broadband services worldwide.

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