VoIP is Connecting with More and More U.S. Households.

A new report by Telephia showed households subscribing to pure-play subscription VoIP, which is either replacing or complementing existing traditional landline services, increased from 2.2 million in the first quarter of this year to 2.9 million in the second quarter. Telephia excluded cable operators that offer Internet phone services, and companies like Skype, who offer free or pay-per-call VoIP in the study.

"With a large share of U.S. households now connecting via broadband networks, VoIP has become a popular and cost-effective alternative for replacement, as well as a complement to the traditional home landline," said Kanishka Agarwal, vice president of new products, Telephia.

Vonage America continues to dominate with about 54 percent of the pure-play VoIP subscription market. Despite their lead, law suits and weak investor confidence have caused the stock to tumble to $6.93 (as of press time on July 21, 2006) from a high at the IPO of $17 per share.

Verizon VoiceWing and AT&T CallVantage tied for second place with 5.5 percent each. SunRocket followed with 4 percent, and Lingo came in with 2.6 percent.

"The VoIP market is highly competitive with many different players trying to get a bigger slice of the market share. Service providers who offer the best customer experience through superior product quality and excellent customer service will beat out their competition," added Agarwal.

Telephia's report showed that more than 27 percent of VoIP subscribers who are likely to change providers cite network quality as their main reason for wanting to switch. Better pricing plans and improved customer service were also critical factors in why subscribers would switch service providers. Also, more than 12 percent of all VoIP subscribers are likely to leave their current VoIP service provider for another supplier within a year.