Voice over IP service has been steadily gaining momentum since it first became popularly accepted. Particularly attractive to small and medium businesses, most VoIP customers choose the service for its price.

It’s gaining so much market share, in fact, that traditional phone services have begin to really feel the pain.

“VoIP service providers’ growth has largely come at the expense of the old phone companies,” noted Patrick Christian, analyst, TeleGeography.

A TeleGeography’s U.S. VoIP Research Service study of the VoIP market in the United States found that VoIP’s popularity has affected the number of users of the Regional Bell Operating Companies. More than 16 million VoIP lines are in use in almost 14 percent of all U.S. households, or 27 percent of homes with broadband.

The study showed that three major telecommunications providers—AT&T, Verizon and Qwest—are losing customers to the tune of 17.3 million lines since 2005, while 14.3 million customers signed up for new VoIP service.

More than 80 percent of new VoIP subscribers choose a cable provider rather than an independent VoIP provider, however. The days of multitudes of small VoIP companies may be fading. “Triple-play” bundles including broadband Internet service, cable TV and VoIP are often a simple and cost-effective choice for consumers. Sometimes the easy choice wins out over the best quality or even lowest price, and package deals offer just that.

RBOCs are fighting the trend by joining it, offering communications bundles and VoIP service of their own. Verizon signed on 1.8 million FiOS Internet and 1.2 million FiOS TV subscribers during the first quarter of 2008, according to TMC. AT&T plans to upgrade its U-verse phone, TV and Internet package soon.

ATSI Communications, Inc., recently finished expansions on its VoIP network, working together with XO Communications. 

The two companies will operate under an agreement that will double the Internet bandwidth for ATSI, as well as increase that capacity in the future. XO provides on demand capabilities with its Ethernet services.

The expansion and future growth gives ATSI the ability to meet its forecasted growth.

“We structured a very flexible arrangement with XO Communications that meets our near term needs for fixed capacity, but also allows us to increase bandwidth as needed to meet customer demand,” said Ruben Caraveo, senior vice president of technology and operations. “As we continue our emphasis on optimizing margins, the increased network capacity is fundamental to meeting our financial objectives in FY2009.”

The agreement gives ATSI the ability to increase its network by 400 percent.

ATSI provides VoIP service though its two wholly owned subsidiaries, Digerati Networks, Inc. and Telefamilia Communications, Inc. Digerati serves markets in Asia, Europe, the Middle East and Latin America, especially Mexico. These markets are “rapidly expanding,” according to ATSI. Digerati’s network is based on partnerships with established carriers, network operators, interconnection and service agreements that give it a flexible NextPoint powered VoIP network.

Telefamilia focuses on retail communication services to the Hispanic market in the United States.

XO is a subsidiary of XO Holdings, Inc., a nationwide provider of voice, data and IP services for businesses and carriers.

VoIP is a relatively young industry—young in the terms of it becoming mainstream, that is, not the technology itself. When it first became widely accepted, there were many small, independent providers of the service.

Now, recent trends show more and more consolidations, as larger telecommunications firms snap up the independents and startups.

VoIP has continued to grow despite today’s uncertain economy—whether in spite of it, or because of it. As the market grows, corporations may battle for market share in one of the “sure bets” for the moment.

Business and financial adviser Grant Thornton, in a report on VoIP convergence based on Frost & Sullivan research, expects VoIP convergence and the resulting competition will be “fierce.” The market may create as much as £13.5 billion, or $26.7 billion U.S. dollars, in the next two years, according to the report.

Grant Thornton also forecast that VoIP might bring the “death knell” of traditional phone service, as both individual consumers and small to medium businesses switch their phone service to VoIP.

“VoIP is no longer next generation telephony, it is here now and 2008 should see strategic acquisitions of independent software developers and ISPs [independent service providers] by large telcos looking to consolidate their VoIP offerings,” said Sarika Patel, head of technology at Grant Thornton.

VoIP subscribers doubled in 2006 and increased fourfold in the last two years, according to Patel. She says the worldwide customer base may top 250 million in two more years.

All that growth brings about new methods and values.

“There is a bitter turf war taking place in the fragmented market of service provision, particularly for customer ownership,” Patel said.

The hot targets in the “land grab” may include smaller residential and enterprise ISPs as well as resellers, the report says.

By now you’ve read that VoIP is growing for businesses and private citizens, in the United States, Europe, Australia, Asia and elsewhere in the world. It just makes sense for the same reasons to many people: Cost, features, management, simplicity.

Another boon to the boom: New jobs. Especially in the U.S., facing increased outsourcing and a possible recession (depending on who you ask, it’s happening now), any sort of economic boost is good news.

IBIS World conducted research indicating that jobs in the VoIP sector may outpace other industries. IBIS estimates VoIP-related careers could grow by almost 20 percent, and salaries may also grow nearly 22 percent.

With increasing numbers of jobs becoming available, hopefully those entering college now will take electronics and communications technology into consideration as they choose their studies. Citing the “public’s thirst for innovative technology” as the driving factor behind growing VoIP jobs, IBIS’ analysts say the future looks good for those entering the technology field.

“The outlook for VoIP is good because household broadband penetration is still rising, facilitating greater use of digital services and helping improve the call quality of industry services,” said George Van Horn, senior analyst at IBIS World.