Discussion Papers

Franz Büllingen, Diana Rätz

VoIP – Marktentwicklungen und regulatorische Herausforderungen
Nr. 264 / Mai 2005


VoIP is regarded as being one of the most important and sustaining innovations in the area of fixed networks within the last years. In the future VoIP services will substitute step by step large amounts of circuit switched telephony calls transmitted over PSTN. While in the past mainly aspects of PSTN substitution and cost reduction have been in the focus of the debate, today VoIP is expected to be an important means of emerging new IP-based value added services, while the "transmission of voice" simply will become a common service among others.

Today’s VoIP market structure in Germany is very heterogeneous. While vertical integrated carriers are orientated to use their efficient PSTN as long as possible without missing the adequate moment for complete migration towards fully IP-based networks, investment strategies of cable network providers instead seem to be reluctant to modernise their infrastructure. It remains to be seen whether they are capable of acquiring a relevant number of DSL customers. If they are successful disregarding the advantage of DSL technology it seems not unlikely, that Voice over Cable will be offered as a triple play standard service to all cable network subscribers besides broadband internet and TV-broadcast in the future.

Established ISP, ITSPs and Not-for-Profit-Clubs are the most active players in the VoIP-market as they keep a key-role for promoting converged networks. It is difficult to predict, whether their business models will be successful in the long run. In the case VoIP services will only induce a re-allocation of access and usage costs and strategies of bundling new services packages will not lead to a clear differentiation of service profiles, integrated carriers owning infrastructure will dominate the VoIP-market segment as well.

It is assumed that low VoIP-prices for end-users will foster migration speed. According to our calculations the offers of call-by-call-service providers are slightly below comparable VoIP-service offers related to national calls as well as to international calls. Consequently there are only low or no incentives for private customers to switch from PSTN services to VoIP services at present.

Recent marketableness of VoIP services has lead to broad regulatory consultation processes in many countries. It is unclear, whether VoIP should be addressed as a regular telephone service or whether it should be treated as a free and unregulated data service in order not to restrict its innovative potentials. Furthermore, regulatory questions have arisen concerning numbering and number portability, the unbundling of telephone and DSL access, the implementation of emergency service functions as well as the provision of legal interception facilities and data retention by VoIP service providers. Because the VoIP market is still highly volatile, the Commission and the European Regulators Group have concluded on taking close looks at the VoIP services deployment and to observe this market before applying the EU regulatory framework and taking coherent regulatory measures. [Only German language version available.]

Diskussion Paper is available for download.

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