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Tue 2 Sep 2008 12:00 AM

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Value-added broadband services hit $25.7 billion

Market for value-added broadband services dominated by Voice over IP says Point Topic

Analyst company Point Topic says that broadband value added services grew by 62% in 2007, to become a $25.7 billion market worldwide.

Value added services on top of broadband are becoming an increasingly significant revenue stream for operators, with VoIP and related security services the clear leader in this emerging segment, accounting for 56% of revenues.

John Bosnell, senior analyst at Point Topic commented: “Value added services are growing strongly and are increasingly significant in overall revenue terms. We estimate that value added services were 10% of total broadband revenues, which includes subscriptions, in 2003 but by the end of 2007 that has increased to over 30%. As it gets harder to make a profit in the hyper competitive line rental market the operators and suppliers have to look to add value, and revenue, with their service offerings.”

The VoIP market is split into two by Point Topic – IP Telephony, meaning VoIP services provided by ISPs, and Internet Telephony – services such as Skype that route voice through the users PC.

Point Topic estimates the number of Internet Telephony users at 20 million worldwide, although in terms of ARPU, users of IP Telephony are ten times more profitable for operators. Uptake of IP Telephony has increased rapidly, although the level of uptake in some markets – such as France, with IP Telephony now accounting for 27% of fixed lines – pointed to market saturation as an eventual possibility.

“The success story of 2007 has been VoIP. Overall revenue has very nearly doubled, average revenue per user (ARPU) is up and take-up in major markets, particularly North America and Western Europe is growing quickly,” said Bosnell. “We expect VoIP to continue to grow strongly in the next few years and in combination with other value adds, particularly IPTV, global revenues should continue to grow.”

Other value added services which added to the market, in order of revenues, include online gaming, home networks, music downloads and video over broadband.

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