Enterprise Communications Services: TDM-Based Services Still Dominate the Voice Market

Published: 11 Nov 2005

By Imran Khan, Program Manager, Communications – Business Services, Frost & Sullivan

Trend Summary

While voice over Internet Protocol (IP) has received a significant amount of fanfare over the past 3 to 4 years, it is traditional time division multiplexing (TDM)-based voice services that still dominate traffic and revenues of the enterprise local and long distance voice services markets. Some of the key factors responsible for the dominance of TDM-based voice services (also labeled as traditional voice services in this article) within the enterprise markets include declining prices for traditional services, VoIP quality of service concerns, and limited enterprise capital spending on network upgrades. Among the leading enterprise voice carriers, a majority have deployed some form of IP telephony services, including premise-based and hosted voice services for small, medium, and large enterprises. While these providers continue to realize growth in their IP-based voice services portfolios, overall, TDM-based services still account for a majority of the enterprise carriers’ revenues and profitability. This article examines some of the key trends impacting the U.S. enterprise voice services markets and also provides a competitive assessment of the leading enterprise voice services providers. The competitive assessment also analyzes the impact of recently approved acquisitions of AT&T by SBC and that of MCI by Verizon.

TDM-Based Voice Services’ Outlook

Enterprise TDM-based voice services market revolves around local, long distance, toll-free, and audio conferencing services. The traditional local segment includes private branch exchange (PBX) as well as Centrex services. Long distance voice includes both domestic and international direct dial as well as card calling services. In addition, long distance services also include toll-free services as well as audio conferencing services. Below are some of the key trends impacting the traditional voice services markets.

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