IP telephony carrier market contracts

The IP telephony carrier market contracted ten per cent sequentially to $861 million (£470 million) in the second quarter of 2008, a report has revealed.

According to research by Dell'Oro Group, service providers were not investing in infrastructure, instead putting their money towards projects.

This was especially true in North America, because the weak economy there was putting pressure on revenue growth for the national network operators.

"Through the first half of 2008, service providers have had trouble justifying the investment in infrastructure upgrades, because revenues from their fixed-line business continue to decline as prices erode and subscribers switch over to cable and, to an ever greater extent, wireless services," said the vice president of Dell'Oro, Greg Collins.

"Service providers are showing that they would rather direct investment dollars toward revenue generating projects than toward equipment that might make existing services more profitable.

However, there was good news for IP telephony in the voice application server market, which saw growth of 30 per cent compared to the second quarter in 2007, with Dell'Oro explaining this is because they are used for new, revenue-generating services.