There’s a new gold rush in telecom, and it’s reshaping an industry still staggering from the collapse of its huge bubble of the late 1990s.
All over the industry, large and small players are working on ways to send calls over the Internet or another data network, with potentially big savings for consumers and companies alike. The technology, known as VOIP (voice over Internet protocol), was introduced to the public in the mid-1990s, but it wasn’t ready to deliver many of the new efficiencies and services that its backers promised.
Now many of the kinks have been worked out, and demand is booming for the service. Sales of Internet phone systems to businesses are expected to more than double this year, even as most capital spending on telecom equipment remains stagnant. And the service is winning lots of fans in the residential market, as cable companies offer Internet calling over their own networks and a host of tiny start-ups offer low-cost, or even no-cost, plans.
Currently, VOIP accounts for less than 3% of global voice phone calls, according to an AT&T estimate. But a number of trends are working in its favor, say industry executives: the boom in demand; the evolution of the technology, which permits companies to offer services beyond the reach of conventional phones; and the spread of broadband connections, which make VOIP much easier to use. Given all that, some industry executives predict that VOIP will eventually replace the circuit-switch technology that telephone networks have used for more than a century.