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Tepid Interest in VOIP in Canada
By Mark Evans | February 7, 2005
A new survey suggests interest among consumers in Internet telephony has failed to increase over the past year despite a growing number of players entering the much-hyped market.
Pollara Inc. found that only 9% of Canadian Internet users would buy Internet telephony service if it was priced at $20 a month. This is slightly higher than the 7% who said a year ago they would definitely buy the service. More than half of the 1,400 of the people surveyed online said reliability and security were key issues — totals that did not change in the past year.
Pollara president Duncan McKie said consumers are waiting for a robust, full-feature service before they switch from traditional local phone service.
“They want all the features before they buy in,” he said. “We are still at the stage in Canada where [Internet telephony service providers] say, 'Reduce your long-distance charges'. The rider is you still need an Internet connection, so you don't get telephony for $20, you get telephony for $39.95 plus $20.”
Mr. McKie said low price continues to be a key sales weapon for Internet telephony providers because consumers need an incentive to give up the reliability and security of their existing local service.
“Past technology introductions into Canada have been successful on a broad scale only when the larger players are involved, and this is no different,” he said.
“Smaller companies will be used by those wanting to experiment, but given the concerns over the performance of these systems, it will be quite some time before consumers chuck their landlines for exclusive [Voice over Internet Protocol] services. Whatever the case, VoIP is still a hard sell.”
Pollara's findings are similar to what Forrester Research discovered in the United States in a survey of 1,131 online households. Forrester found only 43% of respondents had heard of Internet telephony, and only 13% were “interested” or “very interested” in buying service.
Despite the apparent lack of enthusiasm, the Canadian Internet telephony market is expected to see strong growth. Seaboard Group expects there will be 2.12 million Internet telephony customers by 2008, compared with 32,800 in 2004. It expects cable companies will have more than half the market in three years while telecom carriers and independents like Vonage Holdings Inc. will each have 20% to 25%.
The Internet telephony market in Canada will receive a jump-start this year as cablecos such as Rogers Communications Inc., Shaw Communications Inc. and Videotron ltee start to aggressively pursue consumers.
Another key development is how the Canadian Radio-television and Telecommunications Commission will decide how and/or if to regulate Internet telephony.
In a preliminary opinion, the CRTC believes incumbent carriers such as Bell and Telus Corp. should be regulated while competitive carriers such as Rogers, Vonage and Comwave Telecom should be free to set their own prices.
In a recent interview, SaskTel president and chief executive Robert Watson said there must be a level playing in Internet telephony that makes all players operate under the same regulations.
“We're prepared to compete, we have a product and we're ready to go,” he said, adding SaskTel made its views known during a recent meeting with CRTC chairman Charles Dalfen.
© National Post 2005
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