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The Internet's Impact on Traditional Voice Calling (Executive Summary)
26 February 2001 Amanda Sabia Margaret Schoener The advent of the Internet has presented consumers with new technological alternatives to voice calls over the PSTN. Internet-spawned alternatives to the PSTN come in the form of direct-calling bypass of the PSTN via Internet telephony, as well as substitution of traditional voice calling by various Internet communications applications. Gartner Dataquest discusses current penetration of these Internet voice-calling alternatives and proffers recommendations for traditional carriers and Internet providers on how to leverage these trends in their consumer base.
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# The Internet's Impact on Traditional Voice Calling (Executive Summary) The advent of the Internet has presented consumers with new technological alternatives to voice calls over the PSTN. Internet-spawned alternatives to the PSTN come in the form of direct-calling bypass of the PSTN via Internet telephony, as well as substitution of traditional voice calling by various Internet communications applications. Gartner Dataquest discusses current penetration of these Internet voice-calling alternatives and proffers recommendations for traditional carriers and Internet providers on how to leverage these trends in their consumer base.

Table of Contents
The Internet's Impact on Tradtional Voice Calling (Executive Summary) The Internet — Siphoning of Voice Call Usage and Traditional Provider Revenue

The Internet's Impact on Tradtional Voice Calling (Executive Summary) [return to Table of Contents] Gartner Dataquest addresses two key business issues for service providers: What telecommunications technologies will be adopted by consumers and what will be the effects on the service providers? What is the demand for telecommunications services and Internet access services, and what are the preferred and most effective marketing strategies? The Internet — Siphoning of Voice Call Usage and Traditional Provider Revenue [return to Table of Contents] Consumers are finally being offered voice calling from alternative providers such as cable TV companies, next-generation telecommunications companies, long-distance carriers and even utility companies. With the advent of the Internet, additional options are available for voice and voice alternative forms of communication. Recent Gartner Dataquest consumer research indicates that the Internet is having an impact — it is changing voice calling patterns and displacing traditional voice calls with other communication modalities. A previous Gartner Dataquest Pespective titled "Regional Telecom Needs of Online Households" indicated that U.S. online households use more advanced telecommunications services and monthly pay 20 percent and 29 percent more for local and long-distance services, respectively, than their "offline" counterparts. However, being connected to the Internet provides these online households with many communication alternatives that not only enhance their current local and long-distance voice calling but also have the potential to substitute Internet-based communications for traditional voice communications. At the top of these traditional voice communications alternatives are e-mail, instant messaging, chat rooms and Internet Protocol (IP) telephony. These new alternative modes of communication have contributed to reduced voice price points and have siphoned off or displaced usage over the public switched telephone network (PSTN), thus affecting the local and long-distance revenue of traditional telephone carriers. It is important for voice and Internet providers to understand to what extent the Internet is currently affecting traditional telephony voice usage and how they can leverage these trends. The following are recommendations for telecom service providers: ISPs and Internet Telephony providers need to carefully evaluate their IP telephony business model — balancing the "free" offers with requirement for profitability derived from other revenue sources. ISPs and Internet telephony providers need to continually enhance popular alternatives to voice communication, such as expanding the interoperability of instant messaging across ISPs. Traditional switched carriers need to creatively evolve their usage business proposition, offering effective per-minute price plans that deliver all/any distance services. All carriers need to capitalize on Internet communications' application popularity by adopting various forms of value-added services, for example, integrated messaging — synchronizing and interrelating voice messaging and e-mail messaging capabilities. Project Analysts: Amanda Sabia and Peggy Schoener

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