VoIP growth outpaces PSTN in China

IP calls accounted for 43% of long distance calls. It is predicted that the share of VoIP in the Chinese long-distance market will exceed the total long-distance PSTN and mobile calls in the next two to three years.

Traditional telecom operators have become more open to the idea of next-generation networks and VoIP, and in 2006 they began participating in the construction of such networks.

Businesses in China now have a deeper understanding of VoIP. Unlike individual users, business users view VoIP as an opportunity for combining applications rather than lowering their phone costs. The maturity and decrease in the cost of VoIP equipment also has prompted small- and medium-sized businesses to adopt the technology. As a result, VoIP equipment has increased in scale.

It is estimated that the compound annual growth rate of VoIP equipment spending by Chinese businesses will amount to 48% in the next five years. Predicted spend in 2009 is in the region of 4.2 billion Chinese yuan renminbi.

Large VoIP equipment suppliers, such as Cisco and Avaya, accounted for the majority of the sales in China last year.

China is experiencing an increase in illegal VoIP calls, which have been growing 30% every year from 2003 to 2006. Last year, illegal international call volume was about 500 million minutes. As China yields to the World Trade Organisation's requirements, it will experience increased foreign presence. This should give rise to aggressive competition in the country's VoIP market.