ABSTRACT
In this chapter we will consider the market structure of Internet protocol (IP) telephony, while referring to supporting data and econometric analysis. In Japan the number of IP telephony customers exceeded 10 million in December 2005, and there are clear signs that widespread penetration of IP telephony is imminent. Most of this uptake is 050-type IP telephony, a besteffort service and does not guarantee the quality and functionality of wireline phones, but as fiber to the home (FTTH) becomes widely available, 0ABJ-type IP telephony that can fully replace public switched telephone network (PSTN), telephony is poised for takeoff. In this chapter we will consider IP telephony from the following four perspectives. First, we will examine the supply structure of IP telephony. We will begin by defining IP telephony, then explain the differences between 050-type and 0ABJ-type IP telephony. Second, we will outline the current state of IP telephony usage in Japan, based on the results of a consumer questionnaire. We will elaborate on why people use IP telephony services, how satisfied they are with the services, and other information gleaned from the survey responses. Third, we will examine the demand substitutability of IP telephony for fixed telephony, based on conjoint analysis. This will give a good quantitative picture of the basic conditions it would take to induce a fixed telephony user to switch to IP telephony, what conditions must be satisfied for IP telephony to be substituted for fixed telephony, and so on. Fourth and finally, we will address IP telephony interconnection, the impact IP telephony is having on fixed telephony, and some of the relevant policy issues that are in contention.
