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February 19, 1997updated 05 Sep 2016 12:35pm

NET PHONE DEMAND WILL PUSH PHONE COMPANIES ONTO THE NET

By CBR Staff Writer

The rise in demand for Internet telephony will push telecommunications firms into the Internet service provision business, according to industry watchers. The Internet voice market will see revenues of $63bn by 2002, from $741m this year, says a report from Killen & Associates Inc. It predicts that long distance phone carriers will take 70% of that market share in the next five years. At the moment their role in this arena is limited. The report, Internet Voice: Opportunities and Threats, warns carriers that Internet voice traffic will supplant plain old telephone service revenues, but says carriers will not accept this and will claw back their market share. Users will take to Internet telephony mainly because of the price savings. But these savings will be scaled back as telephone companies get in on Internet provision to stop their business trickling away, warns Karl Duffy at Palo Alto, California-based Killen. Long distance carriers won’t stand for the loss in their long distance revenues. The addition of telcommunications firms will put Internet call prices up. A big impact of the increase in Internet telephony will be that as it gets more popular, people will spend more time on their computers, and Internet service providers will have to raise their Internet access rates as a result. This will mean the attraction of Internet telephony will fade slightly as prices go up, says the report: it will still remain cheaper to make calls across the Internet.

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