The market for making phone calls over the Internet is set to more than double to $40 billion within five years, researchers said.
Research firm Point Topic said on Wednesday global growth of fixed-line voice over internet protocol (VoIP) services grew 12.6 percent in 2010 with global revenue at $17.3 billion.
VoIP calls can even be free if both parties are using it -- a service offered by companies such as Skype.
The growth of VoIP has been bumpy but shows signs of acceleration, said John Bosnell, Senior Analyst at Point Topic. VoIP has all the hallmarks of a classic substitution commodity. The U.S. Federal Communications Commission (FCC) said in March that consumer and business use of VoIP rose 21 percent in the year to June 2010. Usage via traditional lines fell 8 percent.
We expect there to be over three quarters of a billion fixed line broadband subscribers by the end of 2015, in theory all of them are targets for VoIP, Bosnell said.
The research firmed warned, however, there were so many variables that forecasts could easily be off by a wide margin.
An increasing number of subscribers for example have no fixed line telephone service at all, relying instead on mobile.
Skype, which was bought by Microsoft for $8.5 billion last month, has around 150 million regular users, but Bosnell added that generated revenue was much lower.
At the end of 2010 it had around 9 million paying users each generating $8 a month on average.
If Skype continues to grow as it has been and manages to keep its ARPU (average revenue per user) at the current level then it will be generating in the region of $2 billion a year by the start of 2016, Bosnell said.
Microsoft plans to integrate Skype into a wide range of products including the Windows phone and Outlook.
(Reporting by Nicola Leske; Editing by David Cowell)