International long-distance slumps, while Skype soars

Growth in international call traffic has slumped while international traffic routed using Skype continues to accelerate, says TeleGeography Research.

International phone traffic grew an estimated four percent in 2010, to 413 billion minutes, down from five-percent growth in 2009, and a far cry from the 15 percent average growth rate achieved during the previous two decades.

Of course, traffic is only part of the story. International long distance, as well as most other forms of long distance service, also have been affected by lower per-minute pricing as well.

International long-distance slumps, while Skype soars: CommsUpdate : TeleGeography Research

Mobile Terminations Now Exceed Fixed

Mobile subscribers have become a powerful force in the international voice market. In 2008, mobile-originated international traffic grew 19 percent, and accounted for 36 percent of total international traffic, up from 32 percent in 2007, according to TeleGeography.

Mobile terminated traffic grew 18 percent in 2008 and accounted for 48 percent of international traffic terminated in 2008. TeleGeography projects that mobile terminated traffic will exceed traffic terminated on fixed lines in 2009.

If you want to know why Sprint is selling "no incremental cost" calling to any domestic U.S. mobile, that is one of the reasons.

That would be a first. Up to this point, more calls have been terminated on fixed phone lines. To be sure, more calls still are originated on fixed lines than mobiles, but even that gap is narrowing.

Mobile phone subscriptions overtook fixed lines in 2002, TeleGeography notes.  By 2008, there were four billion
active mobile accounts globally, accounting for 77 percent of global phone lines. In recent years, growth has shifted to developing countries. Mobile subscriber growth in Africa has led the world in recent years, growing 35 percent in 2008 after having increased 39 percent in 2007.

While growth rates in Africa are tremendous, the subscriber base remains very small—mobile penetration in Africa is still only 39 percent.

Still, India gained 112 million new mobile subscribers in 2008, a net increase that exceeds the total number of mobile subscribers in Germany, says TeleGeography.

China gained 89 million mobile subscribers in 2008, and Brazil, Indonesia and Vietnam all gained more than 30 million mobile subscribers. Conversely, mobile subscription growth in more mature markets has slowed.

Thriving Even When a Market "Vanishes"

Every trusim must be qualified. Consider the gradual folding of the "long distance" calling business into a "triple play" or "mobile calling" bundle. One might correctly note that long distance increasingly is a feature of some other product that a customer buys.

Some of us have said over the years that long distance has ceased to be a stand-alone business, pointing to the physical disappearance of firms such as at&t and MCI, which were built around long distance calling. But that general statement must be qualified.

It might be true at a high level that long distance has changed, and cannot support a firm such as the old AT&T. But that doesn't mean every stand-alone long distance business disappears. Calling card revenue still seems to be growing, for example.

And one has to point to Skype, Gizmo, Jajah, Rebtel and others as examples of companies making a living on long distance calling.

In the same way, some observers have argued that VoIP increasingly is becoming something sold as part of a triple play bundle, or as the technology underpinning for analog voice. The salient example is Vonage's stand-alone VoIP service contrasted with cable operator digital voice.

Again though, one must say the general rule does not rule out the continued ability of some entities to grow their "stand alone" businesses, even in the face of the existence of the larger trend.

At the same time, voice calling and voice features and services are emerging as an attribute of experiences for which there is some alternative revenue or business model.

Stand alone VoIP will be difficult, in many cases. It will not be impossible or unprofitable. The cost structure of such businesses will have to be optimized. But even the pedestrian calling card has continued to offer some firms an opportunity even as ubiquitous mobile phone usage has become a dominant trend.

FCC Ends RBOC Long Distance Restriction

The Federal Communications Commission has eliminated the old requirement that dominant local exchange carriers conduct long distance operations separately from their local access operations. The old regulations obviously don't make much sense in an environment where long distance has ceased to be a separate business, for the most part, and where all access providers routinely bundle access and long distance calling.

As a phase-in mesure, a&t, Verizon and Qwest agree to offer special rate plans tailored to consumers who use little long distance, for a period of three years. As most post-paid mobile calling plans all include bundles of calling including "local" and "long distance," the move allows the former regional Bell operating companies to reduce their overhead.

The change does not materially affect the way wireless and wireline calling is offered to the retail market. The issue isn't really long distance at all. Instead, the bigger issue is which servics, and how many servics, to buy as part of a single bundle, in the consumer market.

To encourage such behavior, Verizon recently increased the price of stand-alone FiOS broadband in some markets if isn't part of a voice or television bundle.