Consumers Not Listening to VoIP Yet

While Voice over Internet Protocol (VoIP) [define] may be making headlines in the tech industry, the majority of U.S. and Canadian Internet users are still largely unaware of this method of communication.

A collaborative research study from the Pew Internet & American Life Project and the New Millennium Research Project (NMRC), along with separate data from Ipsos-Insight revealed that service providers will have to make great strides to inspire widespread adoption, as growth may be small and only within certain populations.

Low-cost landline long distance calling plans and unlimited wireless minutes seemingly eliminate the need for VoIP, but John B. Horrigan, Ph.D. and senior research specialist for Pew Internet & American Life Project, says that consumers who need to make international calls would find VoIP attractive.

Of the 2,204 U.S. participants in the Pew/NMRC study, only one respondent said that VoIP is used in the home. With little data pointing to home adoption and limited awareness, Horrigan says that it was difficult to fully investigate whether calls were domestic or international.

“One nugget from the survey sheds a bit of light on the issue. Internet users between the ages of 18 and 24 were least likely to have even heard of VoIP. This is the cell phone generation – they are mobile, need an innovation in home telephony much less than other age groups, and are more likely than others to say they either don’t have a home landline or are considering going without it,” said Horrigan.

“VoIP doesn’t have a lot to offer these folks – hence their relative ignorance of it – though that might be different if they had a big demand for long distance calls,” he continued.

Presently, 27 percent of Internet users (34 million Americans) have heard of VoIP phone calling, with 13 percent (4 million) of that group considering adoption in their home, according to The Pew Internet & American Life Project/NMRC.

A survey of 1,200 U.S. Internet users conducted by Ipsos-Insight indicates that 54 percent are unaware of VoIP and among those who have heard of the technology, 56 percent are confused about how the computer-based calling service works.

VoIP is even more obscure to Canadian Internet users, according to Ipsos-Reid, with 77 percent reporting that they are unaware of the technology. The term “Internet telephony” [define] was even slightly less familiar to Canadian surfers, with 81 percent unaware.

Despite near invisibility, some adoption estimates are optimistic. The Pew/NMRC study cites research from Gartner, Inc. that forecasts 1 million VoIP subscribers by the end of 2004 and 6 million by the end of 2009, with some experts predicting a 40 percent U.S. consumer adoption rate by 2009.

If focused strictly on home usage, Horrigan says the estimates are quite ambitious. “If that includes business use, that’s a different issue. In terms of prospects for growth, VoIP does have a growing pool of broadband subscribers at home, which is the prerequisite for effective VoIP. If providers can integrate VoIP into existing home broadband offerings, then there is the potential for fast growth in the home market,” Horrigan remarked.

Joseph Laszlo, senior analyst, broadband and wireless, JupiterResearch (a unit of this site’s corporate parent) found that only about 2 percent of online consumers surveyed in June 2003 said they regularly made PC-to-phone calls via the Internet, but as the technology becomes more widely available consumers may not be aware that they are using VoIP.

“I would tend to say that the number of people who specifically say they make phone calls via their computer is unlikely to grow significantly over time. But as Harris [Interactive] and others who track the industry continue their coverage of VoIP, they’re going to have to adopt increasingly subtle ways of phrasing the question, because over time more and more people will be placing phone calls over the Internet (or over IP) who may not even be consciously aware that they’re doing it,” said Laszlo.

VoIP adoption may be hindered because the features are not yet on par with landline and wireless communication systems. “…a lot of friction would have to be overcome before people, on a very widespread basis, ditched their wireline phone for VoIP, ” said Horrigan.

“Not all VoIP has safety features such as 911 and there still issues with voice quality. Cutting price would only go so far in overcoming some consumer reluctance to switch to something new, especially if existing devices (e.g. cell phones or the traditional landline) do the trick for people,” Horrigan noted.