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Sydney, 12 October 2005 - In August 2005, a joint pilot survey on Internet telephony, or Voice over Internet Protocol (VoIP), was conducted throughout Australia with members of the Australian Telecommunications Users Group (ATUG) and customers from engin, a leading Australian broadband telephone company. The survey included over 500 respondents, comprising VoIP users, non-users and home and business subscribers.

Key findings from the joint survey include:

(i) Customer satisfaction with VoIP service is driven by customer perceived value, specifically savings on telecoms spend.
(ii) The average saving of the respondents surveyed was 33% or $44.20 per month.
(iii) 85% of VoIP users would recommend it to others.
(iv) 85% of existing VoIP users are satisfied with VoIP call quality.
(v) There is a high probability that if you use VoIP at work you will use it at home.
(vi) The main inhibitors to increased VoIP penetration are lack of convenience, lack of information and an expectation of poor voice quality.
(vii) The survey indicated no clear link between tendency to use VoIP and telecoms spend, ISP provider, speed of internet, or VoIP service features.

These results are largely consistent with the Organisation for Economic Change and Development (OECD)’s Communications Outlook 2005 report, released in August 2005.

The OECD report indicates that the telecommunications industry has returned to profitability but developments in Internet technology are challenging the role and business model of traditional telecoms companies. The OECD suggests that its findings on the growing popularity of VoIP represent a significant threat to the fixed-line revenues of traditional carriers, especially for international calls, and for mobile telephony revenues.

The OECD report quantifies the economic effect of Internet telephony by comparing the cost of calls via VoIP and via traditional fixed-line carriers in OECD countries, revealing an average savings for users of 80%.

The report contains many tables of information in which Australia is benchmarked against other OECD countries. The key message from these tables is that competition in Australia has not yet delivered the results seen by end users in other OECD countries.

In this context, Australian VoIP service providers can be seen as meeting the global market pressures with offers of new prices and packages.

Commenting on the recent findings in the Australian survey Rosemary Sinclair, Managing Director of ATUG said: “The results suggest that the Australian VoIP market still has some way to go. By way of example, the OECD ranks Australia 7th and 8th out of 30 in terms of most expensive telecoms spend for business and residential subscribers. Yet average savings delivered by use of VoIP is at 33% compared with the OECD suggested average saving of 80%. There is also little evidence of VoIP making any inroads to savings on mobile calls costs in Australia”.

“ The results from our joint survey with ATUG suggest that there is a significant opportunity for VoIP carriers to attract more customers through an information and education campaign that demonstrates the high voice quality levels, ease of use, increased savings and convenience offered by VoIP and technology now available” added Ilkka Tales, CEO, engin.

The survey notes that the greatest threat to the long term success of VoIP as a service is the reduction of fixed line call charges. In other countries this has can be seen through the incumbent fixed line carriers’ introduction of price caps. Therefore, the challenge for VoIP carriers is to rapidly gain a significant market share and transition the Internet telephony service to a value proposition outside that of pure cost savings.

Finally, the Australian survey demonstrated some interesting additional results. Unexpectedly, there was no relation between size of telecoms spend and spend on international and long distance calls, and the use of Internet telephony. There was also no strong correlation between access to broadband and use of Internet telephony. These results may suggest that VoIP as a service is still in its infancy and that the users sampled may be considered “early adopters” and not driven by normal market forces. In this regard Australia may be seen as lagging behind many of the other countries in the OECD, where VoIP has become an established part of the competitive landscape.

In conclusion, the prospects for Australian VoIP operators appear good and they are likely to continue to thrive as long as Australia lags behind the OECD in telecoms sector competitive reforms and the regulatory environment remains open to competition in this form.

About ATUG
ATUG (Australian Telecommunications Users Group) was established in 1981 as a national not for profit industry based body to represent, promote and facilitate the interest of all Australian telecommunications users. See www.atug.com.au

About engin
engin, listed on the ASX (ENG), is the first broadband telephony service to be broadly available to Australian consumers and businesses on the shelves of major retailers. engin is headquartered in Sydney, Australia and was granted its telecommunications carrier license in March 2004 to deliver a digital voice service across existing broadband connections. As winners of the 2005 iAwards AIIA communications category, engin provides affordable telecommunication alternatives for all Australian consumers and businesses. For more information, please visit www.engin.com.au

ATUG acknowledges and appreciates the support of David Waterhouse, a consultant with ION-IP with more than 20 years experience, with assisting ATUG in this survey.

For further press information on ATUG, please contact:
Beth Mackenzie
National Business Development Manager
ATUG
Tel 02 9927 9978
Email beth.mackenzie@atug.org.au

For further press information on engin, please contact:
Guy Downes or Claire Hulbert
Digital Lifestyle Group - Howorth Communications
Ph: 02 8281 3810
Email: dlg@howorth.com.au