Tuesday, February 23, 2016

Orange VoLTE, Wi-Fi Launch" What's the Upside?

Orange is launching voice over Long Term Evolution (VoLTE) as well as Wi-Fi calling across its European operations, “to enrich the voice experience for all its customers.”

The launch illustrates a key business model challenge for telecom service providers launching some next generation networks and features.  The emphasis of the launch is supplying the “very best voice experience available today,” not “new revenue” or “new markets.”

As with some other investments, next generation technology and features essentially is a “cost of being in business,” not a direct enabler of new revenue sources and new markets.

Much the same business model problem was encountered by fixed network operators looking at upgrades from digital subscriber line to fiber access technology.  And some would say high definition voice is the same sort of investment.

All those investments bring “better performance,” but not necessarily much incremental revenue.

Orange VoLTE will provide better experience, reducing connection times from approximately eight to two seconds. Use of VoLTE also will enable simultaneous use of voice and high speed data.

Orange will launch VoLTE beyond its existing Romanian market in 2016 and early 2017.

Orange also is launching Wi-Fi calling to ensure improved indoor coverage. Wi-Fi calling will be launched across Orange’s remaining European footprint in 2016 and early 2017 as well.

Note that the advantage there is a way to support voice connectivity indoors, where mobile signals are weak. Again, we see that an investment is made not to enable pursuit of a new market, but to support basic existing services, customers and markets.

That is one key difference between investments in Internet of Things platforms and services, and much of VoLTE, Wi-Fi calling, and even some portion of the value of access upgrades.

Platforms to support IoT, investors hope and expect, will support big new markets and new services to provide payback from the investments.

Still, as has been clear for decades now, investments sometimes must be made so competitors do not take away markets, and not for traditional reasons (invest X, gain Y revenue).

Such investments are strategic in nature. The investments must be made, as defensive measures, even if incremental revenue is quite slight.

The rationale is not “you make more money, from new services.” The rationale is “you get to keep most of your business.” Or, to be blunt, the upside is “you do not go bankrupt, in the near term.”

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