Earlier this year, many in the voice-over-the-internet business predicted that we are going to end the year with about a million users. AT&T was one of those who believed that a million was a reasonable target. Well we are inching towards end of 2004 and we have some data which shows that there might be a million paying VoIP customers. (I am leaving Skype and Free World Dial-Up out of this discussion!) Vonage is going to end the year with 300,000 users. Cablevision has 250,000 users and I am told Time Warner is right up there just behind Cablevision. Assuming that Time Warner has about 150,000 customers …. that makes the #1, #2 and #3 with 70% of the total market.

And that leaves more than 400 VoIP providers including big daddies like AT&T, Verizon, and SBC, not to mention pesky upstarts like Sun Rocket with 30% of the market. Ouch…. that’s a lot of fighting going on for scraps. Given the situation, it seems that $199 a year package or $999 for life package from some little known company is not surprising. Next year it is going to get even more difficult for smaller guys especially now that Comcast has made its VoIP intentions clear, and even Cox is getting its VoIP groove on. I think eventually AT&T, Verizon and SBC will manage to get VoIP right, and so will Qwest. That’s a scary prospect for small upstarts.