Skype, Vonage Lose Marketshare to ISPs

Broadband telephony services bundled with cable or DSL internet access has become an increasingly more popular way of accessing voice over IP telephony than software based products.

Sandvine, a network usage monitoring company released a study of 700,000 households, studying their broadband telephony usage. The report that Skype’s VoIP service, which was the leader of the VoIP market, has been overtaken by VoIP packages bundled with broadband providers such as BT Mobile and AOL.

“Twelve months ago, Skype represented 90 percent of all VoIP minutes. Now people are buying branded services,” says a Sandvine representative.

Sandvine says that 51% of all European VoIP calls were sent through these broadband provider packages, while Skype accounted for approximately 45% of all VoIP traffic. Vonage, the U.S. leading VoIP provider, accounted for less than 1% of the European traffic.

“ISP-branded VoIP is, and will continue to be, a key factor in driving revenue growth and triple-play success for service providers,” says an analyst from The Yankee Group.

Skype reports downloads on their software of approximately 250 million, however, analysts suggest that the actual userbase is likely closer to 6 million.

“There are a lot more broadband users now, and first-timers tend to use VoIP supplied with vendor broadband packages,” says Sandvine.

This trend isn’t specific to the European market, the study shows that Skype currently holds 14% of the U.S. market, and Vonage 22%, where last year, they were the leaders of the American market.


Skype and Vonage are feeling the effects of broadband ISPs offering their own VoIP services.

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