'Sweet Spots' of the VoIP Market Identified in Recent Connecticut Research Study.

Business Editors/High-Tech Writers

GLASTONBURY, Conn.--(BUSINESS WIRE)--Feb. 10, 2004

Maturing from "Technology Push" to "Market Demand Pull," the VoIP Industry Enjoys High-Growth, Low-Cost Sales in Select Market Segments

As the smoke clears from current "next-telecom-boom" hype, Voice over IP (VoIP) is emerging as a serious commercial opportunity driven by strong customer demand, reports Connecticut Research in a newly-published White Paper.

In "VoIP Finds Its Sweet Spots - You May Be Surprised Where," Connecticut Research finds that some VoIP applications have successfully transitioned from "technology push" to a "market demand pull" environment driven by every marketer's dream: a wildfire of word-of-mouth sales and customer referrals.

But much depends on the type of VoIP pursued. VoIP is not just voice over the Internet, but is far more variegated than many realize; and among the diverse market segments are a trio of business models that may offer the greatest commercial promise. The new White Paper defines seven discrete VoIP segments, and provides case studies of three companies that exemplify winning business models.

"The case studies reveal a key finding," says Connecticut Research founder and president Richard G. Tomlinson. "Technology-based services must pass through a period of critical examination, which if successful, can then lead to self-generating customer demand. The market acceptance scenario for some VoIP applications is now identical to that previously seen with fax machines, PCs, e-mail, cell phones and WiFi."

VoIP firms profiled include:

-- Vonage. Vonage leverages the "free" bandwidth of existing

broadband cable and DSL Internet connections; and, unlike

early Internet computer-to-computer calling, offers real VoIP

telephone service over the Internet. The company has more than

90,000 lines in over 100 U.S. markets, providing an acceptable

level of voice quality for residential and small business

customers. Cable telcos and traditional telephone companies

are being forced to re-architect their systems to respond to

the Vonage competitive model.

-- Cbeyond Communications. An IP local telephone company, Cbeyond

targets business customers, offering high quality VoIP and

data service using Cisco Systems (NASDAQ:CSCO) softswitches

rather than circuit switches. This low-cost system

architecture may set the new business model for CLECs.

-- DSL.net.(NASDAQ:DSLN) Initially a pure SDSL play, DSL.net

entered the VoIP market last year, becoming an integrated

voice and data company. DSL.net leverages its own nationwide

ATM network combined with a softswitch to deliver VoIP capable

of meeting Service Level Agreements and Quality of Service

commitments. This may be the model for network-based DLECs to

expand into full service providers.

VoIP is becoming a disruptive technology across the whole spectrum of telecommunications equipment and service. In some sectors, it has permitted brand new players to seize significant market shares (e.g. Level 3 (NASDAQ:LVLT) in transport and Cisco Systems (NASDAQ:CSCO) in PBXs). In all sectors, it has caused traditional equipment and service providers to adapt. In a few selective niches it has broken the mold for competition. Connecticut Research has identified these as VoIP's "sweet spots" and presented case studies of three small companies successfully mining these markets.

To read the complete Executive Summary of "VoIP Finds Its Sweet Spots - You May Be Surprised Where" or to order the White Paper go to Connecticut Research's web site, www.connecticutresearch.net

About Connecticut Research

Connecticut Research, Inc. of Glastonbury, CT is a consulting and publishing company that has provided insight and analysis to the telecommunications, computer and information services industry since 1986. Connecticut Research has produced numerous white papers, market studies, technology evaluations, business plans, due diligence studies, venture analyses and technical reports for its clients, which range from emerging enterprises to some of the nation's largest communications firms.