VoIP Puts the Squeeze on Private Lines

The migration of private line services to VoIP will kick in after the end of this year, according to a report from In-Stat/MDR. The market research firm predicts that by 2008 private line services spending will plunge to about 22 percent of 2004 levels, because of the move to Internet phoning.

Even T1 won’t escape: In-Stat says T1 service is likely to experience a long and slow decline similar to the downsizing agonies currently being experienced in long distance and local telephoning. “Traditional T1 providers may be able to manage the erosion through innovation ” i.e., step up plans to offer integrated T1 lines, and by focusing on specific segments of the market, like mid-sized businesses with 100 to 999 employees,” said In-Stat chief market strategist Kneko Burney in a statement.

In a survey that included T1 users, In-Stat found that companies of mid-range size were more likely to hang onto traditional service than smaller and larger firms, which were more likely to switch from T1 to integrated T1, cable, or VDSL technologies. As for spending, the survey found that the small business market is already cutting back while spending levels in mid-level and enterprise markets are expected to decline by 2005.


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