Wednesday, July 10, 2013

Voice over LTE Getting Traction?

Service providers often face business model issues when transitioning from an older network to a new network, especially when the new networks have to support legacy applications. Consider the case of a telco upgrading its digital subscriber line network to a fiber to home or fiber to neighborhood network.

The business problem often is that capital has to be invested to support applications that offer no incremental value, or little perceived incremental value, over the older network versions. Fiber to the home offers faster speeds than DSL, but many consumers often do not see the need for the higher speeds, initially. Stranded capital results, in other words.

Up to this point, Long Term Evolution support for voice has been a similar case in point. Service providers have been relying on workable 3G voice while using new LTE bandwidth for Internet-based services.

Though there arguably are new features supported by Voice over Long Term Evolution (VoLTE), there have been some technology issues to be overcome. But an equally important issue is that it has not been clear any incremental revenue can be earned by deploying VoLTE.

To be sure, it is simpler, and more elegant, to deliver voice using the same network used for Internet access.

Some also believe VoLTE will offer additional features, compared to legacy forms of mobile voice. What operators are hoping for is that a combination of VoLTE, high definition voice and Rich Communications Suite will create a differentiated voice value proposition.

Also, at some point, supporting voice on LTE networks will allow operators to decommission the 3G networks, freeing up spectrum.

But as a practical matter, lots of mobile service providers have opted to rely on 3G for voice, using 4G primarily for Internet access operations.

"Operators are using another solution called circuit-switched fallback CSFB, and my understanding is that has worked better than operators had dared hope for,” said Mark Newman, chief research officer at Informa Telecoms & Media.

Some argue VoLTE adoption has been slower than anticipated in part because 3G voice still works, and because shifting more data access operations to 4G has the effect of freeing up more bandwidth on the 3G networks as well.

Stéphane Téral, Infonetics Research principal analyst, argues that VoLTE adoption will accelerate now that SK Telecom has shown how well VoLTE works in a national deployment.

Infonetics Research now expects 12 commercial VoLTE networks and eight million VoLTE subscribers by the end of 2013, with about three-quarters of those in Asia Pacific region.

At the same time, any number of observers might say there remains the possibility that over the top mobile voice could have bigger impact.

“While Skype dominates the over-the-top mobile VoIP space, the market is seeing other applications such as Fring, KakaoTalk, Line, Nimbuzz, WeChat and Viber gain in strength,” said  Diane Myers, Infonetics Research principal analyst.

“But the fact remains that most over the top mobile VoIP providers are making very little money per user,” said Myers. “In 2012, the average revenue per user was a meager US$7.13 annually.” That is an unsustainable business model, if not augmented in other ways, she said.

The number of global OTT mobile VoIP subscribers shot up more than 550% in 2012, to over 640 million, and is expected to approach the 1 billion mark in 2013, Infonetics Research estimates.

But Infonetics Research also projects the number of VoLTE subscribers to grow at a 145 percent compound annual growth rate from 2012 to 2017.


JoshVoice said...

Just desire to say your article On Corporate Voice Overs. The clarity in your post is simply excellent and i could assume you’re an expert on this subject.

JoshVoice said...

Awesome work once again! I am looking forward for your next post On Corporate Voice Overs

Whose Free Speech is Protected?

First Amendment law admittedly is arcane, but occasionally becomes important in the context of how industries ought to be regulated. One tho...