Time Warner Cable is leading the US ISPs in VoIP subscribers, just behind Vonage (who isn’t an ISP). Apparently, Vonage now has 1.2 million subscribers, and Time Warner Cable has 1.1 million. This represents some massive growth.  By the end of 2005, VoIP usage in the US hit 4.5 million users, with Time Warner Cable and Vonage seeing just about half between the two of them.

Eventually, of course, the number of subscribers will dwindle, but it certainly makes the argument for the Telcos to be pushing their VoIP services harder.

Comcast has been pushing its Digital Voice service pretty heavily now, offering unlimted local and long distance for $39.95/month (plus a string of fees a mile long, including their own fee that’s neither a tax nor actually required for them to charge) + international long distance fees, etc, etc.  With pricing like that, it may not appeal to many people, but most of their customers are going to be pre-existing Comcast subscribers who just want to get away from their phone company and want to do a minimal amount of work researching alternatives.

It is clear, though, that VoIP is growing rapidly in the US, but not nearly as rapidly as it’s growing in Asia or some markets in Europe.  Part of this has to do with some of the regulations the US government is putting on VoIP companies that make it difficult to compete in a market already dominated by only a few giant telecoms and cable providers. A good portion of this, however, has to do with the fact that a majority of people still don’t know what VoIP is and don’t care.

Many companies are marketing VoIP products under different names, such as Comcast’s Digital Voice Home Phone Service, or AT&T’s CallVantage. Verizon’s Voicewing services simply calls itself Broadband Phone Service to compete with Vonage’s marketing penetration as the ‘Broadband Phone Company.’  The distinct absence of the word ‘VoIP’ and the sometimes misleading information makes consumers think they’re just getting a new phone service — like their old one but with better rates. Ask a Comcast Digital Voice subscriber if he wants to use VoIP, and he’s liable to tell you no, that he’s happy with his regular phone service. Time Warner Cable simply calls their service ‘Digital Phone’ with no reference to the technology that drives it anywhere to be found.
This has created a huge explosion in VoIP usage without the least understanding of the differences between VoIP and regular phone service. In fact, it’s this misunderstanding that’s fueling the VoIP expansion, with consumers more interested in cheap rates and a phone that works like a phone than in all the technological possibilities VoIP might have to offer.

The question is, will the bubble burst with the advent of something new or will it just flatten out, with every telecom and cable ISP offering VoIP and only VoIP to consumers, and there being little choice left in the market?

Currently, rates for VoIP services from the ISPs are roughly equivalent to the telco charges that people had been paying in the past, but with enhancements such as free (national) long distance or a dozen or so features included in the package. Will they go down, or will the competition become non-existent, leaving us with just a new expected price for phone service?