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Cable Companies Scramble for their piece of Increasing VoIP Market

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By Chris Hill

Summary: Cable Companies Scramble to compete with Telecoms for the expanding VoIP Market.

Note: I wrote this article to answer the questions I commonly get from our customers asking about the direction of VoIP technology. I wanted to address where the market currently stands, and what we can look for in the coming months. For further reading, I would recommend looking deeper in the reference section.

San Francisco, CA June 19, 2006: With VoIP becoming a viable alternative to standard telephone service, interest in it’s underlying technology has sky-rocketed. The demand for VoIP service and equipment increased dramatically in the first quarter of 2006. According to a recent Infonetics report, CMTS ( Cable Modem Termination System) sales jumped 30% from the previous quarter to a high of $257 M. This is due to a combination of increased demand from Multiple Service Operators, pushing VoIP services as well as Cable companies scrambling to compete with Telecom giants to increase bandwidth capacity and support the rising demand for communication alternatives.

While early on, marketing departments looked for a way to create a consumer-friendly term to describe VoIP services, ISPs have now settled on common phrase. Branded as “Digital Phone,” Cable companies are looking to grow existing demand for VoIP services as more people are seeking cheaper ways to communicate. Technologies such as SIP, short for Session Initiated Protocol can establish sessions for features such as audio/videoconferencing, interactive gaming, and call forwarding to be deployed over IP networks, thus enabling service providers to integrate basic IP telephony services with Web, e-mail, and chat services. With SIP protocols, MSOs will be able to merge this technology to existing cable modems, enabling an easier transition to Digital Phone service. In addition, SIP is being developed for both wired and wireless services; Cable companies are looking at this protocol as a potential next-generation technology for integrating VoIP into users experience. This may spell trouble for the smaller VoIP providers as the large Telco’s and Cable providers look to enter the market with a bang.

While the MSOs are competing to bring Digital Phone to the market, Cisco is emerging as the far and away leader in this exciting market. According to figures from the first quarter, Cisco Systems currently provides over 60% of the ports and equipment (VoIP Gateways, switches) used in VoIP networks today. These increases in market share are prompting companies like Motorola to explore the possibilities of telephony service. This would allow Motorola to leverage their wireless phone service to utilize VoIP technology to recognize a users mobile phone and enable mobile service when it makes a connection with a Wireless Fidelity Gateway. With the ever-increasing demand for communication alternatives, VoIP technology seems poised to become the backbone for the emerging Digital Phone revolution.

Sources:

“CMTS market up 30% in 1Q06 as VoIP and high speed Internet access customers increase.” Infonetics Research. May 30, 2006. June 15, 2006. <http://www.infonetics.com/resources/purple.shtml?ms06.ca.1q06.nr.shtml>

“MSOs and Vendors Tackle Hurdles On the Road to Digital Phone Service.” Multichannel News. August 8, 2005. June 15, 2006. <http://www.multichannel.com/article/CA632687.html?&display=Features&referral=SUPP>

About Author

Chris Hill has a collective 5 years experience in IT sales. He is currently Director of Carrier Sales for Townsend Assets Group (TAG), a leading reseller of pre-owned data networking and VoIP equipment. With more than 2500 customers in 23 countries, TAG helps customers acquire, manage and remarket their technology. For more information go to http://www.townsendassets.com/

For information on current Used VoIP Gateways, or other pre-owned networking hardware, be sure to check out our inventory page for current pricing and specials. We strive to help our customers find the right equipment to meet their unique needs. I can be emailed at chris@townsendassets.com