Report: Aussies ditch fixed lines in favour of VoIP and mobile

A number of Australian companies have ditched their fixed lines in favour of mobile and voice over Internet Protocol (VoIP) services as recent reports indicate the trend to VoIP, and away from fixed-line phones is gathering steam.

A joint Atug and Engin survey and a report on the Fixed Voice Services Market, released last week showed that business customers have cut phone bills by 75 percent and are starting to move into the second phase of VoIP.

Research firm Market Clarity also forecasts the decline in total fixed phone lines is set to continue as broadband adoption corrects an inflated market for second-line services.

Shara Evans, CEO of Market Clarity, said, "Businesses started buying IP PABXs or call managers several years ago and began implementing telephony over their local area network - getting QOS in place and testing out the deployment," she said.

The second stage was connecting their various offices together.

"We are just starting to get into that full swing now - and so we're seeing businesses that no longer need as many basic access lines. Instead they are putting some of that traffic across their own data network, and in most cases that is not the public Internet, but a carrier-grade network," she said.

The Atug/Engin survey reported that 41 percent of business users said overall service was better than their fixed-line service. It showed also that businesses are making 10 percent more calls over VoIP than they did previously; and, perhaps most significant, 8.5 percent of business respondents have cancelled their fixed service to use VoIP exclusively.

In the consumer space, the decrease in second fixed line services will continue to shrink by around 71 percent over the next five years as people replace dial-up Internet connections with ADSL or other forms of broadband, according to the Market Clarity report, which studied a number of services provided by eight carriers, representing what the researcher claims to be more than 90 percent of telecommunications service revenues.

Evans said there is a small but growing minority group of households - mostly young group houses and single adult houses - that opt to use mobiles and have no fixed line at all.

"The group households consist of young individuals who are primarily contacted by their mobile phone and that is the way they have connected with friends for years now, and in many cases, they have never seen a reason to have a fixed line number," she said.

The primary phone line market is not going to go away as quickly though, largely because about 74 percent of Internet access is still ADSL, which requires part of the spectrum of a phone line, Evans said. "Most people will still have at least one fixed-line phone until more broadband connection types become available or until there is the option of buying a line without a phone service, which is not likely to happen in the near future."

Several areas of the study show that consumers are making decisions based on convenience rather than cost saving alone.

"For example, minutes of local fixed to fixed-line calls are starting to decrease and will continue to do so. This is interesting, because Australia is one of the only countries in the world to still offer untimed local calls, which provide good value for money, but people are choosing the convenience of mobile," she said.

"Also, long-distance minutes across networks were increasing steadily until 2004, but they are now steadily decreasing because of substitution with VoIP and mobile."

Eventually the vast majority of fixed-line calls will be going through a VoIP network, as carrier investment has moved from circuit switches to soft switches, Evans said.

"While the fixed-line telephone will have the same look and feel, it will likely be a VoIP phone - it will just be running over a carrier-owned VoIP network rather than the public network and it will be invisible to the end user."

Telecommunications analyst Paul Budde recently released a report stating that the enormous growth of broadband in Australia is unprecedented in the world, and that January this year saw broadband subscribers cross the three million mark.

Household penetration now stands just above 30 percent, and business penetration is around 70 percent, he said.

Budde predicts the growth will continue to see four million broadband users by the end of the year, and six million by 2009.

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