Operators have a $200 billion opportunity staring them in the face,
but only if they use mobile Voice over IP
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
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
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.