Internet telephone service now has 400,000 U.S. customers but that number could explode to over 12 million by 2009, according to market research firm Jupiter Research.
Jupiter said that 12 million could arrive in spite of younger customers being harder to sign up, what with startups like Vonage gathering early momentum and more established telephone companies coming in to dominate the Internet telephony market with their brand and marketing power and large incumbent customer base.
"It is unlikely that start-up [Internet phone] providers will become a significant threat to the incumbent phone companies," Jupiter analyst Joe Laszlo wrote in a new report in which he noted that Internet telephony at first would have to overcome "lingering concerns" about quality and reliability, something he said customers rate higher than pricing and features.
AT&T recently launched an Internet phone service and Verizon is about to jump in, while cable operators might be preparing to launch their own Web-based telephony brands, Jupiter said.
Getting younger customers to buy in, however, might be more difficult than Internet telephony providers actual and incoming might think, Laszlo said, because many if not most have grown up with the cell phone and might prefer no wireline service at all.
On the other hand, if Laszlo said the biggest competitor for younger phone users won't be the Bells but the cell phone operators, the Bells have that one taken care of: Verizon, BellSouth, and SBC run the largest wireless phone services in the United States, though AT&T doesn't have its own wireless network. AT&T plans instead to offer Internet phone service to high speed cable subscribers and avoid using the Bells' wireless networks, since the Bells charge a fee for using their local lines to reach consumers.
