Forecasting Internet telephony – using scenarios to quantify the effects of using the Internet as a voice phone

The Internet offers individuals and organisations almost unlimited access to information and with that information, a proliferation of services. For information intensive companies its development provides both opportunities and threats. Telecommunications companies are at the heart of Internet developments. They provide the distribution channels, from hard wires through satellite, through which the information is delivered. Many of them are Internet service providers giving users access to the World Wide Web. They gain revenue both through the use of the channels and the added value services they provide. However, technical developments now permit the Internet to be used in place of a conventional telephone. The only expense to the user is the cost of the local connection and the charge by the service provider. How does this affect the revenues of a telecommunications company, undermining as it does the most profitable of its services, long distance calls? This paper examines the problem of forecasting the effects of Internet Telephony on the revenue of telephone companies. It is a forecasting problem with only limited relevant data. The results suggest that companies which do not provide local access are much more vulnerable than those such as BT that offer a full range of services.