Skype's market share halves

Internet telephony products bundled with broadband services have become more popular than third-party products, according to a report published by Sandvine, a broadband network monitoring company.

Sandvine said that Skype's VoIP service was overtaken in Europe by broadband subscription packages sold by vendors such as BT, Wanadoo and AOL during the fourth quarter of last year.

In Europe, branded VoIP represented 51.2 percent of all VoIP calls in the last quarter of 2005, while Skype accounted for 45 percent of VoIP minutes. Vonage took less than one percent of the market while other third-party VoIP providers represented 3.5 percent of all VoIP traffic, the report said.

"Twelve months ago Skype represented 90 percent of all VoIP minutes. Now, people are buying branded services," said Chris Colman, Sandvine's managing director for Europe, on Tuesday.

Skype's VoIP client has been downloaded over 245 million times, according to the company. However, analysts have claimed that the actual base of regular users is much smaller. Point Topic estimated last summer that there were 5.3 million Skype users.

While Skype users are continuing to use its services, new broadband users were increasingly opting for broadband packages, according to Sandvine.

"There are a lot more broadband users now, and first timers tend to use VoIP supplied with vendor broadband packages," said Colman.

The same trend was found in the North American market. The study found that US branded VoIP represented 53 percent of VoIP minutes on broadband networks. Vonage, with 21.7 percent and Skype, with a 14.4 percent share, were the leading US third-party providers. Other third-party VoIP providers claimed the remaining 10.9 percent share of minutes.

The inclusion of VoIP within broadband packages has encouraged broadband take-up, according to analyst firm Yankee Group.

"Broadband service provider branded-VoIP has been a key factor in driving carrier growth and triple-play success over the last year," said Nicole Klein, senior analyst for broadband access technologies at Yankee Group, in a statement.

The data for Sandvine's report was collected by monitoring the VoIP traffic trends of 700,000 broadband households, from a group of service providers with a total of six million subscribers.