By Michael Singer
March 10, 2005
Operators could make an additional $200 billion annually if they move to mobile VoIP with the help of new technologies.
Operators have a $200 billion opportunity staring them in the face, but only if they use mobile Voice over IP to rethink their end-user services and networks, according to one research firm.
According to an upcoming report by Pyramid Research titled “The Future of Mobile Voice,” voice over wireless LAN and convergence technologies are the key to improving growth in a $500 billion market that analysts claim is grinding to a halt. Report author Svetlana Issaeva surveyed the overall mobile voice market, which she said is at risk of commoditization due to extreme competition and price drops.
“In developed markets, mobile minutes are often given away for a pittance in the heat of competition, decreasing voice ARPS [Average Revenue Per Subscriber], while mobile data adoption remains weak,” Issaeva said in her report. “Voice ARPS — whether at $45 per month in Japan or $9 per month in China — has nowhere to go but down.”
Pyramid’s best estimates show mobile voice traffic and revenue slowing down around the globe, with total industry revenue maxing out at around $700 billion in 2009. And even though the number is above the total size of fixed-communications markets, only emerging markets will see growth remain in double-digits, the report said.
“Mobile operators must react soon. This means integrating new delivery networks like wireless LAN and moving towards mobile VoIP, otherwise they risk losing ground to fixed-line operators, who are aggressively seeking to incorporate mobile services into their portfolios,” Issaeva said.
To keep the ball rolling, Pyramid’s report suggested new IP technologies give fixed-line operators and VoIP service providers a chance to add mobile voice offerings and expand revenue streams. One immediate fixed-line operator strategy focuses on retaining enterprise subscribers through VoWLAN (voice over wireless LAN) and cutting back on fixed or mobile substitutions by offering mobile VoIP@Home with unlicensed mobile access (UMA) technology.
“In our opinion, mobile operators can hardly afford to miss the train, and their delivery networks must transform to include WLAN, along with other new technologies,” the report said.
Pyramid’s article also recommended IP Multimedia Subsystem (IMS) and VoWLAN for cellular companies so they can enhance their products with personalized mobile voice services, improve their competitive standing and slow down the rate of voice commoditization.
“Culturally, the communications experience of youth is changing,” VoIP guru Jeff Pulver told internetnews.com. “The phone is an anachronism like the horseless carriage. When you ask a teenager if they have talked to someone and they say, ‘yes,’ they do not make a distinction between the phone or Instant Messaging or chat rooms or e-mail. So one of the challenges for operators is to capture that generation. I haven’t seen anyone out there address that need yet.”
Some of those unique services tailored to the needs of individual users might actually be combinations of things like mobile voice with multimedia services such as video and messaging. Evidence from the fixed-line sector shows that bundled services offer sharp reductions in churn and have positive impact on keeping subscribers on the site.
“Perhaps, the future of mobile voice is to be sacrificed via bundling with other services,” Issaeva said. “If it wins revenue growth and customer loyalty for mobile service providers, then the sacrifice is well worth making.”
As for Mobile Virtual Network Operators (MVNO), the report says they are firmly in place in Europe and are preparing to make a mark in the U.S. markets with names like Virgin MobileUSA, Boost Mobile and TracFone. Unlike their underlying carriers, MVNO’s have business arrangements with traditional mobile operators to buy minutes of use for sale to their own customers.
“They are often hard to beat on cost and often benefit from such competitive measures as mobile number portability. Fighting fire with fire has proven to be the best way for European service providers to compete,” Issaeva said.