VOIP WILL ACCOUNT FOR 5 PERCENT of total end-to-end fixed voice traffic in Western Europe in 2006 and reach 100 percent in 2020, according to Forrester Research. Businesses will lead VoIP adoption with 10 percent of traffic in 2006 being VoIP. The shift from circuit-switched (TDM) to packet-switched voice (VoIP) networks over the next two decades will be the biggest challenge for European telephone companies such as British Telecom and Deutsche Telekom, according to Forrester.

In the U.S., VoIP faces both technical and regulatory challenges. Traditional phone companies consider VoIP operators a serious threat and have been arguing to the FCC that they should be subject to the same rules and regulations traditional phone companies deal with. Several states are drafting IP telephony regulations; the furthest along is Minnesota, which has asked Vonage, an IP Telephony provider, to apply for certification as a phone company, and submit a list of its prices as well as a 911 emergency phone plan. However, a Minneapolis federal judge responded by barring the state of from regulating Vonage as a traditional phone service. This ruling might affect the regulatory activities in other states, or the FCC might step in with national regulations.