U.S. VoIP Ranking by Subscriber: Q2 2004

This horserace has just begun, but a few companies have taken a surprising early lead.

by Alex Goldman ISP-Planet Managing Editor [October 18, 2004]

Rank	ISP	Subs. (thousands)	Date & Source
1	Skype (free VoIP)	9,500	[August 29, 2004] Press Release
2	CallWave (a pre-IPO company with a history of free service)	797	[September 29 2004] Prospectus, filed with the SEC
3	Vonage	275	[undated] Corporate website
4	CableVision (cable VoIP under the Optimum Voice brand name)	115	[August 9, 2004] Press Release
5	Charter (cable VoIP )	31	[August 9, 2004] SEC filing
	Note: data was unavailable for the following: Comcast, EarthLink VoicePulse, BroadVox, and Primus' Lingo service. If AOL or United Online provide VoIP, no data was available, although both claim to be working on solutions.

The real story on VoIP statistics is not the current rankings but the rate of growth. This is most striking in the case of new services. CableVision reports that its Optimum Voice service gained 44,235 subscribers between March and June of 2004, finishing with 115,050. That means 38 percent of subscribers had signed in the most recent quarter for which statistics are available.

This is the rate of growth of any new business. VoIP itself is not new, of course, but its viability is new. The processing power, the CLECs, the algorithms, the regulations, and the bandwidth to make it possible have only come together recently to make it all possible.

The dark side of this new new industry is the number of key players for whom no public statistics are available. As long as some major players are not reporting subscriber totals, growth, and churn, we will not know for certain how sound this business is.

We do not have reservations about putting Skype at the top of the table, but we have noted that the Skype service consists mostly of free users of a computer-to-computer only service. We suspect that Skype will have some success upselling loyal users who like its software and outsider cred in much the way that United Online has built a successful brand name from the ashes of Juno and NetZero. CallWave already has managed to upsell free users to paid, and completed an IPO on September 29, 2004.

Pricing is a key factor. Broadband reports in its rankings lists several VoIP providers with an average price of $20 or less. Cable companies and other companies that continue to insist on charging close to $50 should, in the long run, lose out to cheaper services unless they can block all other VoIP services on their network (see, for example, VoIP Battleground in RBOC Monopoly War, below).

Please do not take these statistics as any indicator of who will be ahead in the future. They show who's ahead just out of the starting gate. The race is on, and other companies may jump in at a later date. These statistics are a snapshot in time, showing the race as of June 30, 2004. We're not rooting for any one contestant. We think that this is no zero sum game, and every player can be a winner. We think that, but until we have better data, we will not be certain of it.