Yankee Group announced that web-based VoIP applications are posing a competitive challenge for traditional service providers in their drive to maintain customers. While telcos typically focus their attention on the competition from cable companies and wireless carriers, a new market threat comes from Internet-based voice applications, which offer consumers a compelling service that enables low-cost or free calling across international boundaries.

According to the Yankee Group Report, Web Voice Services Challenge the Incumbents in Telecommunications, published recently, the build-out of voice services including Skype, Google Talk, Yahoo! Messenger with Voice, Microsoft's Windows Live Call and AOL's AIM Phoneline have heightened consumer awareness of VoIP by enabling free calling between PC-to-PC users. However, it is the new and unique contextual applications for voice that will be a draw for the technologically advanced consumer over the next five years and challenge telecom, mobile and cable companies to provide comparable voice services. Yankee Group finds that contextual applications for voice - where users discuss their interactions while gaming, shopping or building content - is the most compelling service that will drive consumers to greater usage of web-based VoIP services. Currently, gaming has the greatest potential for unique web voices for consumers in this arena.

"With a footprint larger than the telcos and cablecos, as well as price points far below premium mobile services, web-based VoIP applications are seen as a disruptive threat for traditional telcos in the industry right now," said Jennifer Simpson, Yankee Group, Consumer Technologies & Services analyst. "One way for telcos and cable voice operators to preserve their legacy voice customers is to build service partnerships with portals to gain some revenue in this emerging market."

Portals play an important role in the growth of online voice applications because their current audience share far exceeds the customer base of traditional service and cable providers. However, all web-based voice providers are not created equal: Skype has been strong in building out its services beyond the PC; AOL's AIM Phoneline has made efforts at building out telco-like packages of minutes and Google is depending on developers to enhance its service provisions. It will be difficult for telcos alone to provide services similar to the new voice communications because of the enhanced content provision capabilities of web-based voice applications.