VOIP Hype Alive & Well

For those who were concerned the buzz about VOIP was beginning to wane, fear not. The fine folks at the Yankee Group issued a bubbly report earlier this week that forecasts there will be 17.5 million U.S. households with Internet telephony service by year-end 2008. The Yankee Group also expects 56% of the homes with the service will be cable customers, and Vonage's market domination will shrink. When it comes to predicting trends four years out, there should always be some uneasiness. Technology, market developments and pricing are so volatile and unpredictable, it makes forecasts a bad science. Anyone who bought in the enthusiastic e-commerce forecasts in the late-1990s knows this lesson far too well. There is no doubt Internet telephony will take hold if only because it will be so attractively priced (including bundles that include cable and high-speed Internet access) that many consumers will find it hard to resist. The challenge facing carriers is whether they jump into the VOIP business or start playing the pricing game with their traditional POTS technology. Truth be told, they probably don't have much of a choice.