Wednesday, April 20, 2016

Managed Voice over Wi-Fi Should Improve ARPU, Study Suggests

It stands to reason that a voice over Wi-Fi (offload) would boost profit margins for any mobile carrier voice service, at least marginally, as the carrier benefits from a lower cost per bit profile, as access is shifted to the fixed network.

A new analysis by ACG Research suggests that is the case.Looking at a business case for a developed country service provider with mature VoLTE penetration, ACG Research suggests managed Wi-Fi voice quality also helps, as it encourages users to make heavier use of voice over Wi-Fi mechanisms.

The results suggest that average revenue per user is maximized when the quality of VoWi-Fi is high (resulting in increased usage) and data offload is easily available (resulting in lower cost per bit).

Figure 5. The Higher the VoWi-Fi Penetration the Higher the EBITDA and APPU

In the first scenario, the service provider’s network features 10 percent use of untrusted VoWi-Fi and no use of trusted Wi-Fi.

This results in a low adoption of VoWi-Fi due to quality and user experience issues.

In the second scenario, the service provider’s network uses 30 percent trusted VoWi-Fi and seven percent untrusted VoWi-Fi, resulting in VoWi-Fi penetration that is higher than VoLTE.

This combination delivers $19.91 billion EBITDA (24 percent higher as compared to the first scenario) and a monthly APPU of $19.91 (35.5 percent higher as compared to the first scenario) with both ramping to Year five.

As VoWi-Fi grows the cost per voice minute drops, reaching a value of $0.0072. In the first scenario the service provider’s network is dominated by VoLTE penetration, resulting in the cost per voice minute being 19.5 percent higher than the second scenario.

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