Traffic Migration from Telephony to Data Networks

Jiong Gong, Bellcore

Recent introduction of real time voice applications on the
Internet has aroused predictions that voice over IP will be the
next generation telephony. The development also leads to public
policy issues of whether Internet traffic should pay access charges.
We provide empirical evidence that telephony traffic migration to
the data nework already started many years ago albeit in text form.
If the current trend continues, the accumulated revenue loss to
telephone companies is expected to run into several billionss of
dollars. We use a combination of time trend regression model and
Bass technology diffusion model to estimate the loss of telephone
revenue as a result of users having access to the Internet. The
study makes use of a sample of more than 50,000 business units over
a period from 1992 to 1995.