"No Business Case" for Voice over LTE, At Least, Not Yet

“VoLTE rollouts are taking off, but “There is no business case,” at least yet, for voice over Long Term Evolution, says Stéphane Téral,Infonetics Research principal analyst.

To be sure, that could change over time, and some might argue that high-definition voice services already operating on over 100 global GSM networks do have a business case, mainly related to boosting the value of carrier voice services, and thereby stemming churn.

Some might argue the effort to add value as a means of protecting voice revenue streams is an issue in the over-the-top voice app market as well.

“Japan-based Line has topped Skype as the market leader, capturing roughly a quarter of worldwide active users in 2013,” says Diane Myers, Infonetics Research principal analyst for VoIP, UC, and IMS.

In a manner similar to high-definition voice, Line has added new unique features, including stickers and games that change the product.  

Myers also notes that “most providers in this space are making very little money per user, an unsustainable business model for many independent companies”

That said, revenue for over-the-top mobile voice apps will experience 12 percent compound annual growth rates between 2013 and 2018.

The inability to create a sustainable revenue model therefore is an issue both for over-the-top and carrier voice services, one might argue.

To be sure, scale is an issue. There were eight networks and about 12 million VoLTE subscribers worldwide in 2013, mostly in South Korea. But voice is a scale business. A feature has value when it can be used on both ends of a connection, not just one end. VoLTE therefore has to become ubiquitous before its advantages will be consistently experienced.

By the end of 2014, Infonetics expects an additional 30 commercial VoLTE networks to launch and VoLTE subscribers to increase to 51 million.

In 2013, there were 1.5 billion mobile VoIP (mVoIP) subscribers worldwide, the bulk consisting of OTT applications.

The majority of OTT mVoIP application usage continues to occur in the Asia Pacific region, particularly in China, South Korea, Japan, India, and Indonesia.

Observers will disagree about what voice strategy makes most sense for carriers or app providers. “Add more value” is one logical approach. “Harvest” is another rational approach.

So far, it isn’t clear which strategy makes most sense, for specific service providers in specific markets.