• by Shankar Gupta , April 7, 2006

The number of households using Voice over Internet Protocol for phone calls will climb to 32.6 million by 2010--up from 5.2 million this year, according to a new eMarketer report. The report attributes the growth to Internet telephony's far cheaper pricing than traditional phone plans.

"With most VoIP offers ranging from $15 to $30 per month for unlimited local and long distance calls across the U.S. and Canada, price will be the primary driver for the VoIP industry in the short term," the report stated. "Those that survive the fierce price competition are likely to be companies able to offer advanced voice features and other service bundles."

VoIP pure-play Vonage has secured the most subscribers as of the end of 2005, with 1.25 million--with cable/broadband providers Time Warner and Cablevision following, with 1.1 million and 731,000, respectively. Telecommunications firms Verizon and AT&T have also launched their own VoIP offerings, with only modest subscriber bases--120,000 and 165,000, respectively, according to data compiled by eMarketer.

The increasing competition could benefit online media companies, as VoIP providers are heavily promoting their services on the Web. Already, Vonage is the single largest online advertiser, according to Nielsen//NetRatings AdRelevance unit. Serving 16.6 million impressions last month, Vonage's campaigns dwarfed competitors such as Time Warner--which served around 400,000 impressions--and Verizon, which served 6.2 million impressions, according to Nielsen//NetRatings AdRelevance. Vonage's campaign made it the largest advertiser on the Web, as well--with Verizon coming in fourth overall, and BellSouth, another old-school telco with a VoIP product, coming in twelfth, with 2.5 million impressions served.