Telecom's rivals will increasingly turn to broadband technology to challenge the dominance of the incumbent in the voice market, according to an industry analyst.
David Kennedy of research company Ovum said rival telcos would use voice over internet Protocol (VoIP - making phone calls over the internet) to
utilise existing infrastructure and cut costs, nibbling away at the voice market share held by the major player.
"The response we're tending to see from the incumbents [is] we're tending to see them stick with PSTN [public switched telephone network] generally, but they're cutting their PSTN prices to match VoIP," he said.
Telecom last year made $962 million from calling revenue - over 20 per cent of its total revenue - down slightly on the previous year.
Kennedy said the trend was for challengers aiming at the "premium" end of the market to develop a VoIP service to offer in addition to existing broadband offers.
He said the next step was to look at introducing IPTV or other content services to compete effectively with the established players.
2talk is the latest company to bring out a VoIP proposition, announcing a service for small business customers on the back of its existing retail offer.
General manager Jude Flood said the offering was set up after the company discovered small businesses were using its regular, consumer-focused service in the office.
VoIP technology is already used by some large corporates, particularly to reduce calling costs between branches.
2talk has been the focus of a legal stoush between CallPlus founders Annette Presley and Malcolm Dick.
Presley last year won the right to take Dick to court over his establishment of 2talk, which she says is in direct competition with VoIP services provided by CallPlus and retail subsidiary Slingshot.
CallPlus has been offering a VoIP service, iTalk, to business and residential customers for several years.
The company last year announced it would begin testing a movie download service.
