Small and medium sized businesses (SMBs) in Asia will spend more than $500m on internet phone calls this year, researchers predict.

The spending represents an increase of more than 40 per cent over last year and growth is expected to continue at a similar pace, according to research consultancy Access Markets International Partners. 

"Traditionally, large businesses were prime targets for IP telephony," said Cindy Sim, an analyst at AMI Partners' Singapore office.

"Today, SMBs also represent key focus areas for service providers. SMBs also want to enjoy the cost savings and flexibility that enterprises obtain with IP telephony."

IP telephony rollout is strongest in areas with good broadband coverage. " Within Asia-Pacific, excluding Japan, IP telephony will be driven by SMBs in Australia, Singapore, South Korea and New Zealand," predicted Sim.

The IP telephony market will grow at a compound annual rate of more than 45 per cent over the next five years, according to AMI's forecasts.

Vendors are likely to see margins fall as smaller enterprises take to VoIP in greater numbers, according to Frost and Sullivan research published earlier this year.