Virtual VoIP carriers drive China's VoIP industry

By the end of 2011, China's broadband VoIP subscriber base served by telecom carriers will rapidly expand to 9.53 million, up from 720,000 in 2006, reports In-Stat.

In its research The Consumer VoIP Market in China: Virtual Carriers Still Have Legal Market Space, In-Stat cited that the relatively high-long distance calling rates in China's telecom market has lead to the rapid market recognition of VoIP services in the country. Apart from the success of IP card services, telecom carriers are continuously pushing for broadband IP telephony service in the country.

"Another class of providers, virtual VoIP carriers (VVCs) provide PC-to-phone services by deploying soft-switching systems on Internet and media gateways between the Internet and public switched telephone networks," said Kevin Li, In-Stat analyst.

"The Ministry of Information Industry [in China] has declared that broadband IP telephony service can be legally provided only by traditional service providers, thus VVCs are operating illegally and have little phone-number resources (most subscribers can only make outgoing calls)," explained Li.

He furthered that the intense competition among voice service providers, plus VVCs' lower price over traditional long-distance calling or IP card services, puts VVCs to an advantageous position.

"However, due to intense competition among voice service providers, and VVCs' lower price compared with traditional long-distance calling or IP card services, VVCs are having success."

VVCs had 1.1 million consumer subscribers in 2005, and In-Stat estimated that this figure rose to around 1.23 million in 2006. Moreover, In-Stat projects that consumer broadband IP telephony subscribers served by VVCs will grow to 12.96 million by 2011.