VoIP a “Credible Threat” to Voice Revenues, says Frost

Mobile VoIP is no longer just hype, but has become a credible threat to traditional voice revenues. Given that it’s only a matter of time until Internet Protocol (IP) becomes the principal transport for various access technologies, an ambitious group of mobile VoIP start-up companies are creating a paradigm shift in the way users communicate with each other, with voice services moving to a true Internet era of Telco 2.0.

So says Frost & Sullivan in new analysis, Impact of Mobile VoIP on Next Generation Cellular Networks, which finds that that at the end of 2008, approximately $605.8m (£421.9m) of mobile VoIP revenues were generated in N. America, Europe, Asia Pacific and Latin America. This is expected to grow to $29.57 bn by 2015. “The emergence of flat-rate mobile data pricing, positive growth of smartphone shipments, and high-speed mobile broadband availability has spurred the adoption rate of mobile VoIP,” says Frost & Sullivan senior industry analyst, Saverio Romeo. “Mobile operators realise they can no longer ignore the fact that mobile will be a key component of integrated IP-based communications and next generation wireless technologies such as HSPA+ and LTE.”

The research notes that significant traction in the application space, primarily driven by the success of the iPhone, has resulted in several smartphone vendors making provisions in their applications stores for users to download and use third-party VoIP clients over both wi-fi and cellular broadband networks. However, many cellular operators have prohibited the use of mobile VoIP over their cellular networks, with some imposing a surcharge to avoid cannibalisation of their circuit-switched voice revenue streams. Moreover, cellular operators face intense competition from the more popular web-based VoIP alternatives that are permeating the mass market.

“Despite user demand for cost-effective services, some mobile operators will continue to discourage mobile subscribers from using VoIP over cellular networks and suggest that it will not provide the same quality, efficiency and reliability of services offered by the GSM network,” says Romeo. “Recent surveys indicate that 60 to 70 per cent of the major European mobile operators prohibit or restrict the usage of VoIP over their popular mobile broadband data plans.”

Mobile operators should eventually do away with imposing bans or surcharges to their mobile broadband packages to support mobile VoIP, Frost & Sullivan believes, as the client devices supporting HSPA+ and LTE will be based on open platforms and will support SIP for third-party applications.

“When the operators migrate to an all-IP IMS network, they should drive innovative services such as multimedia telephony, high definition voice, integrating voice with context-based information about the user, and the device from a converged presence-enabled address book,” concludes Romeo. “This will enable them to differentiate their services from mobile VoIP start-ups.”

For more information on the study, send an e-mail to joanna.lewandowska@frost.com with your name, company name, title, and contact details.