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Mobile VOIP threatens voice revenues

Admire Moyo
By Admire Moyo, ITWeb's news editor.
Johannesburg, 04 Apr 2012

Mobile voice over IP (VOIP) is taking off, and mobile operators are coming under considerable strain as a result.

Market research firm Frost & Sullivan predicts that mobile VOIP will grow from $605 million in 2008 to $29.5 billion in 2015, presenting a credible threat to traditional mobile voice revenues. It attributes the popularity of mobile VOIP to relatively low costs in comparison to traditional voice calls.

In a recent study, research firm In-Stat said growth rates for mobile VOIP are strong, and by the end of the forecast period in 2015, users will have grown to nearly 83 million lines or seats.

According to David Meintjes, MD of Connection Telecom, mobile VOIP's explosive growth will be driven by continued improved WiFi access and, soon, long-term evolution (LTE).

He adds that with the rise of smartphones, there has been a corresponding increase in generic softphone applications -which allow calls over the Internet.

“In fact, along with a myriad of other phone apps, softphone apps have become the new driving force behind mobile phone sales. This has given device manufacturers increasingly more control over the phone user experience - previously the domain of mobile network operators.”

On the other hand, Bennie Langenhoven, managing executive at Tellumat Communications Solutions, says he does not believe the uptake of mobile VOIP is a threat to mobile operators yet.

However, he points out that the growth is, nonetheless, taking some revenue away from mobile operators.

“An area where mobile operators are loosing out on revenue is during inter-nation roaming when VOIP applications on mobile devices are used in WiFi hotspots to make VOIP calls. These represent a small percentage of all mobile calls and often the call quality is of such a nature that a mobile call is made anyway.”

World Wide Worx MD Arthur Goldstuck says mobile VOIP is still in its infancy in SA. “The apps available for mobile VOIP have been downloaded by many people, but there is still little interoperability and, therefore, little visibility across the user base.

“We can expect this to change once Skype becomes integrated with Windows Phone, and when the likes of MXit offer a VOIP option,” he explains.

For now, adds Goldstuck, WiFi is the logical carrier for mobile VOIP, as it allows callers to use their phones as the physical mechanism, but WiFi-based data access as the carrier mechanism, which is a lot cheaper than using mobile data, and tends to provide a more stable signal as well.

“However, LTE will offer a powerful signal that will be ideal for mobile VOIP, as long as its pricing makes it viable. If it comes in at a premium price, it may not be more viable than conventional mobile voice.”

Commenting on the local scene, Langenhoven says there has certainly been some increase in the use of mobile VOIP as unified communications vendors started pushing their fixed mobile convergence solutions into the enterprise.

“Also, some of the hosted VOIP providers promote the use of VOIP clients on smartphones and can be used as such, provided the smartphone user has reasonable Internet connectivity. This trend will continue, but at the same time, the mobile operators will start pushing their own fixed mobile convergence solutions into the market to retain customers.”

Meintjes also believes that, for now, mobile network operators still have an ace or two up their sleeves, despite VOIP commoditising their networks and traditional voice-focused business models.

However, he states that their choices are limited: “Currently, mobile network operators must either stick with their current business models, thus losing voice traffic to new market entrants, or offer a mobile VOIP service of their own.

“In the latter process, they will have to undercut their highly profitable voice minutes in favour of lower-margin data throughput, but at least they will retain (ever-increasing, but less profitable) voice traffic as one class of data service. Whichever route they choose, they must face the slow death of their super margin,” says Meintjes.

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