VoIP (voice over internet protocol) pure plays like Skype and Vonage have no chance of dethroning proactive European incumbent telcos from their consumer fixed voice market leadership, according to a report from technology market research firm Forrester Research. VoIP pure plays will fail to survive as independent companies because they don't offer a truly disruptive and transformational service - and they lack key advantages that the incumbents have. Telcos like British Telecom and France Télécom can continue to dominate future voice markets as long as they maintain their proactive and innovative VoIP response strategies.

It doesn't help much if a new technology is very disruptive in a market that will remain rather small for years to come. Only one per cent of Europeans use VoIP frequently to make calls from home, whereas 70 per cent of consumers don't even know what VoIP is. Coupled with relatively low broadband take-up, European consumer VoIP adoption will move slowly. VoIP is expected to capture 30 per cent of the residential fixed voice market in 2010 and won't approach 100 per cent until 2020.

In addition, the incumbent telcos are fighting back. Proactive incumbents like Telecom Italia, France Télécom, and Portugal Telecom launched flat-rate PSTN calling even before VoIP pure plays became a threat, reducing VoIP's threat to their core PSTN business. Since then, a majority of incumbents have introduced various flat-rate pricing plans, further reducing their vulnerability to VoIP pure plays. Smart incumbents are also tearing down technology silos and focusing on user needs, not technology, further undermining VoIP pure plays' key selling points. And by launching their own VoIP services, ADSL bundles, and enhanced functionality services, incumbents are fighting the pure plays on their own turf.

Forrester believes that VoIP pure plays will fail in the new telecom world. Falling short of true disruptive potential, lacking all the important advantages of incumbent telcos, and facing more intense VoIP competition from all comers, VoIP pure plays like sipgate, Telio, Gossiptel, and Vonage will not be able to survive for long as profitable free-standing companies. Skype's investors were lucky to be able to bail out to eBay before the consolidation game kicked in. In Norway, that game has already delivered more than 20 VoIP pure play casualties in less than nine months. The best the pure plays can hope for is to be acquired - or to license their often interesting technology and service concepts.

In the second quarter of 2005, Forrester Research surveyed more than 25,000 consumers across Europe - including France, Germany, Italy, the Netherlands, Spain, Sweden, and the UK - about their use and knowledge of VoIP and triple-play technologies. We also asked them what would make them use these technologies more.