Europe : Videotelephony, long the Cinderella of telecoms services, could be a mass market within five years, according to a new report from Analysys, the global advisers on telecoms, IT and media.

"With the arrival of mass-market broadband and video-capable mobile phones, there is at last a real opportunity to turn videotelephony from what has been a rather minor specialist telecoms sector into a mass-market one," says Chris Moller, author of the study. "Increasing bandwidth should help to turn videotelephony into a more desirable service and, critically, into one where demand is not constrained by specific needs."

The report, The Future for Personal Videotelephony, argues that although the initiative is currently with 3G operators, there is a major window of opportunity ahead for fixed broadband operators. "The range of possible applications using fixed broadband networks extends much further than what is possible on 3G, where limited bandwidth will limit the market to mostly fun applications," says Chris Moller. Despite the limitations of mobile videotelephony, Analysys forecasts consumer spend of over EUR1.5 billion by 2007.

The report argues that it is in fixed operators' interest to incorporate videotelephony into long-range strategies. Rupert Wood, principal analyst at Analysys explains: "Developing attractive videotelephony services can be seen as a means of shifting long-term growth strategy away from the difficult and highly competitive environment of one-to-many media delivery and into a new extension of what is operators' core business area: one-to-one communications." Although it is early days, operators like Fastweb, with an established fixed videotelephony service, and France Telecom, through the recently announced Wanadoo Visio service, are beginning to push fixed-line videotelephony out into the mass market.

But major technical barriers remain. "Operators need to think strategically about the value of upstream bandwidth," says Moller, "and this is something that the media delivery business model has tended to undervalue." Moreover, the report warns, broadening the appeal of services from the enthusiast to the general public will need investment in guaranteed IP bandwidth and simple fixed-mobile interoperability. The long-term stakes are very high, but who will come to dominate in this market will be determined by those that start thinking strategically about videotelephony now.