Last year was a breakout time for Internet telephone services, with the number of U.S. subscribers more than tripling to 4.5 million and industry revenue surpassing $1 billion.
When 2005 began, there were 1.3 million subscribers of Voice over Internet Protocol services, according to a survey by analysis firm TeleGeography. In the last three months of the year alone, 900,000 people signed up for VoIP services.
VoIP requires a broadband Internet connection or a cable subscription, and generally comes in competitive calling plans.
Cable companies are now the largest providers of VoIP services, with 52 percent of the market compared to 45 percent a year ago.
The largest VoIP provider is still independent Vonage Holdings Corp. It had 1.2 million subscribers at the end of the year, just ahead of the 1.1 million at Time Warner Inc.'s cable division. But Time Warner Cable is the fastest-growing provider and appears set to surpass Vonage this year.
TeleGeography predicts that VoIP companies will continue to add about 3 million subscribers a year for the next three or four years.
Even with that growth, VoIP remains a relatively small slice of the phone business. There were 132 million residential and small business phone lines in the United States in December 2004, according to the latest figures available from the U.S. Telecom Association.