In 2006 , IP telephony will gain wider adoption in the Asia-Pacific in the next few years, predicts research firm Frost & Sullivan.

For example, Australia's IP telephony market was worth US$75.5 million in the first half of 2005 and is forecast to grow at a compound annual growth rate (CAGR) of 16.2 per cent from 2005 to 2011.

In China, the IP telephony market was worth US$61.8 million in the first half of 2005, and Frost & Sullivan expects this market to grow at a CAGR of 25.7 from 2005 to 2011.

The technology is also forecast to gain wider market acceptance in Singapore. In the first half of 2005, the IP telephony market was worth US$14.6 million and projected to to grow at a CAGR of 12.5 percent between 2005 and 2011.

In one of its reports, Frost & Sullivan stated that revenues in the first half of 2005 more than doubled, compared to the first half of 2004. The Asia-Pacific market was valued at US$556.4 million in the first half of 2005.

However, not all IP telephony customers are expected to run on pure IP technology, said Wong May-Ann, an analyst with Frost & Sullivan Asia-Pacific.

"Many customers, especially in the more conservative markets, are adopting a hybrid approach towards migrating to IP," she said. Conservative markets are countries such as Thailand and Vietnam, she added.

According to Wong, the more developed markets are Australia, New Zealand, Singapore and Japan, while China and India are those with "high growth potential".

Outlook.06 What's hot IP telephony adoption is likely to increase in the Asia-Pacific reigon, but customers in more conservative markets are likely to first adopt a hybrid approach towards migration. Bottom line: Many more potential customers remain unaware of the benefits of IP telephony, thus hampering mass adoption.

As the replacement cycle kicks for networking equipment, Wong explained, businesses will adopt hybrid solutions that allow them to continue using analog or digital endpoints.

According to Frost & Sullivan, replacement cycle denotes the time when businesses replace their old telephony systems with new ones. In most parts of the Asia-Pacific region, the last replacement cycle took place in 2000, following the replacement of systems to become Y2K compliant.

As most vendors in the enterprise telephony space have introduced IP telephony solutions, many will likely protect their installed base from competitors by offering attractive IP migration plans to existing customers, Wong added.

"This aggressive push from the supply-side also contributes towards growth in IP telephony," she said.

Another development in the voice-over-IP (VoIP) arena in 2005 could spur further adoption of the technology. In November, a handful of VoIP providers banded together to promote the use of Internet telephony.

Called the Internet Voice Campaign, the group is a part of the VON Coalition which aims to increase adoption and use of VoIP. EarthLink, Google, Pulver.com, Sonus Networks and Skype, which was acquired by eBay, are founding members of the new group.

About 3 million people use VoIP today, according to market research group IDC. But that number is expected to increase to 27 million by the end of 2009. Still, the Internet Voice Campaign believes that adoption of the technology could be sped up if people were more aware of the benefits.

The Internet Voice Campaign hopes that with education, it can help dispel some of the misconceptions and concerns that users have about privacy, security, power failures, and call quality.