Surprising New Data on Telecom Revenues

There are some interesting conclusions one might draw about the relative importance of several service provider products, in the latest communications industry revenue forecast published by the Telecommunications Industry Association. The most-obvious take away is the dominance and importance of wireless services.

U.S. wireless revenue in 2012 will be about $335 billion, while fixed network voice revenue will be about $132 billion, with an additional $38 billion in broadband access revenue and $6 billion in television revenue, for a total of about $176 billion in fixed network revenue.

In case you hadn’t noticed, in the U.S. market, wireless now is 66 percent of total revenue; all fixed network services just a third.

Globally, the trends are even more lop-sided, as mobile revenue is, by some measures, 4.5 times bigger than fixed-line revenue, already.

The other observation is that, as vital as all the new revenue streams are, legacy voice continues to be the most-important source of revenue for fixed-line service providers. With the growth of broadband access, entertainment video and VoIP, that might come as a surprise.

So what of voice, the traditional “most important” revenue source. As it turns out, legacy voice still is, far and away, the most important revenue source.

VoIP will continue to expand at double-digit rates in 2012 followed by high single-digit gains, averaging 9.4 percent on a compound annual basis for the forecast period to $18.9 billion, in the U.S. market.

That compares with circuit-switched voice revenue that, though declining at a 1.5 percent compound annual rate through 2015, still will represent, in 2015, a $127 billion revenue stream. VoIP will amount to about $19 billion in 2015.

In other words, as a revenue source, legacy voice is seven times bigger than VoIP.

That is not to deny the importance of VoIP in the consumer market. In 2012, VoIP access lines will be about 49 percent as large as circuit-switched lines, for example, suggesting that perhaps 58 million VoIP lines are in service. But the notable point is that VoIP does not represent all that much revenue. In 2015, declining circuit-switched voice will still represent an order of magnitude more revenue than VoIP.

In contrast, fixed network broadband access services will amount to about $46 billion in annual revenue by 2015. Entertainment video will contribute about $14 billion in annual revenue in 2015.

So VoIP will be a bigger revenue stream than entertainment television, but not by much. In 2015, legacy voice still will be the single most-important revenue stream for fixed-line service providers, by far, even though it is declining.