Telecoms face internet challenge

New online technology, known as Voice over Internet Protocol (VoIP), is the latest innovation set to overhaul the industry, an OECD report said.

VoIP allows people to make calls over the internet for a fraction of the cost of fixed-line connections.

This threatens the fixed-line revenues of traditional carriers, the OECD said.

Mobile operators will also face a challenge from VoIP providers and could lose their place at the vanguard of technological innovation as cheap internet phone calls attract more business, the OECD added.

"VoIP presents a challenge to mobile telephones, which in many countries are now more numerous than fixed connections," the OECD said.

'New approach'

Internet giant Google announced it was jumping on the VoIP bandwagon on Wednesday with the launch of Google Talk, an internet-based instant message and voice service.

The VoIP market has been led by Skype, one of the first companies to offer internet phone calls.

VoIP telephony revenues look set to nearly double to almost $8bn (£4.4bn), according to figures from Lehman Brothers and comScore Media Metrix.

The OECD predicted that the rise in popularity of the internet for communications - as well as a source of media content - could have wider reaching implications for the broadcasting industry and telecoms industries.

"The growing popularity of downloading video from the internet will reduce the time people spend watching free-to-air TV, driving down audience share and advertising revenue for broadcasters," the OECD said.

This could make it "harder for public-service broadcasters to meet their social policy objectives", the report said.

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