Light Reading

Mobile VoIP: No Profits, Big Problems

Carol Wilson
LR Mobile News Analysis
Carol Wilson, Editor-at-large
7/17/2013
50%
50%

The booming growth of mobile VoIP isn't reaping financial rewards for the providers, but it is creating revenue problems for some mobile operators and painting a clear picture that VoLTE deployment, while under cost pressures, can't be indefinitely delayed.

Recent research from Infonetics Research Inc. shows 550 percent growth in mobile subscribers in 2012, with the number of users expected to near 1 billion in 2013. And while Microsoft Corp. subsidiary Skype Ltd. owns about 40 percent of the market, there is no shortage of other over-the-top voice applications, all of which is a major headache for mobile operators, says Diane Myers, principal analyst for VoIP, UC and IMS at Infonetics.

(Who saw this coming? Here's who: LTE Voice Lag Leaves Operators Vulnerable.)

Operators such as KPN Mobile and SK Telecom have been vocal about seeing voice and messaging revenues plummet as the OTT apps gain ground. SK Telecom launched its successful VoLTE service in April, garnering 3.6 million customers in April.

"There is Skype and then there are about nine others that are doing fairly well in terms of having active users," Myers says. "And now we are seeing service providers get into the game -- a kind of 'if you can't beat 'em, join 'em' strategy."

She points to operators including max.mobil, Telefónica SA (which acquired Jajah), Megafon, Orange and others who are offering their own VoIP services to compete. (See Telefónica Buys VoIP Player Jajah).

But in joining the OTT VoIP crowd, mobile operators are quickly discovering that being popular doesn't make mobile VoIP profitable -- far from it. Infonetics' estimation of the revenue per mobile VoIP subscriber is a mere US$7.13 annually.

For the OTT VoIP crowd, that reality means looking for other ways to make money -- possibly through ad insertions or by providing the voice segment of a mashup that pulls in other third-party apps for which people will pay, such as presence or gaming, or by charging extra for video-conference or multi-party video.

Vivox, which provides the voice chat platform for T-Mobile's Bobsled service, sells its voice service extensively for use in gaming applications, for instance. Nimbuzz Group moved its headquarters from Europe to Southeast Asia, where it is partnering with mobile operators which use its platform as their OTT app.

"They are enabling international calling -- with Hutch in Sri Lanka, for instance -- for populations with international calling needs," Myers says. "All of [the mobile VoIP players] are looking for ways to charge for a specific service or charge a network partner."

Calling outside the application -- a "Skype-out" option -- is common and therefore not a differentiator or a way to make much revenue. In fact, Myers says, mobile VoIP apps aiming at international calling for their game plan are likely to eliminate outside calling to attempt to expand their reach.

The end game for many of these mobile VoIP players may be to build up enough of a customer base that they are attractive acquisition targets, Myers suspects, and their prime targets will be the mobile operators.

Many of those operators, meanwhile, are looking to deploy their own voice-over-LTE (VoLTE) services and are quite aware that the market has driven down the value of those services before they even hit the market.

Martin Taylor, CTO of Metaswitch Networks, which has developed a cloud-based, open source IMS platform called Project Clearwater, has talked to many mobile operators on their upcoming VoLTE deployments and hears their concerns about how it's "hard to build a business case to invest millions of millions in an IMS architecture to offer a service that is going to be competing with OTT." (See IMS Gets Some Open-Source Love.)

Those same operators realize they can't not offer a voice service, leaving customers to find their own OTT offering. It's one of the reasons "the horizon on VoLTE keeps receding," Taylor says, and one of the drivers for his company's push to a cloud-based offering that can scale up and down more cost-effectively.

Myers' additional research shows operators are stepping up their IMS deployments to support VoLTE. "Over 90 percent of the operators participating in our IMS strategies survey plan to deploy VoLTE by 2015, up from zero today," she says. "This is going to shape the IMS market in the coming years." — Carol Wilson, Editor-at-Large, Light Reading

(8)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
philharvey
50%
50%
philharvey,
User Rank: Light Beer
7/22/2013 | 5:01:01 PM
re: Mobile VoIP: No Profits, Big Problems
Dan, is public hotspot Wi-Fi calling really analogous to a carrier managed VoLTE service?
Kim Peinado
50%
50%
Kim Peinado,
User Rank: Light Beer
7/18/2013 | 7:41:14 PM
re: Mobile VoIP: No Profits, Big Problems
Thanks for this great article, Carol. One data correction: Infonetics reported that “The number of global OTT mobile VoIP subscribers shot up more than 550% in 2012.” The stat in this article incorrectly states that there was a "550 percent growth in mobile subscribers" -- "mobile subscribers" should read "OTT mobile VoIP subscribers." Thanks - Kim
brookseven
50%
50%
brookseven,
User Rank: Light Sabre
7/18/2013 | 4:30:42 PM
re: Mobile VoIP: No Profits, Big Problems
I use it at Starbucks all the time and have done so when traveling internationally in hotels.

seven
DanJonesLRMobile
50%
50%
DanJonesLRMobile,
User Rank: Light Sabre
7/18/2013 | 3:57:33 PM
re: Mobile VoIP: No Profits, Big Problems
I've found it useless on public hotspots.
brookseven
50%
50%
brookseven,
User Rank: Light Sabre
7/18/2013 | 3:54:50 PM
re: Mobile VoIP: No Profits, Big Problems
I find WiFi calling very effective. Has cheaply (for 0) allowed me to replace my landline.

seven
DanJonesLRMobile
50%
50%
DanJonesLRMobile,
User Rank: Light Sabre
7/18/2013 | 2:17:27 PM
re: Mobile VoIP: No Profits, Big Problems
Wi-Fi calling sucks though, makes me fear what VoLTE calls will actually be like in reality.
brookseven
50%
50%
brookseven,
User Rank: Light Sabre
7/18/2013 | 5:33:33 AM
re: Mobile VoIP: No Profits, Big Problems
Carol,

I have the WiFi calling option from T-Mobile. It is a VoIP option that does not require a different number or application. Basically it works just like your cell and does not take minutes. I believe this derived from the older UMA work that T-Mobile did.

Just something else out there.

seven
gconnery
50%
50%
gconnery,
User Rank: Light Sabre
7/17/2013 | 11:01:44 PM
re: Mobile VoIP: No Profits, Big Problems
Here, I have a little tiny violin I can play for them...

Its been obvious for a while now that operators need to make their money in the future off the DATA. All of the US operators have switched their packages so that they'll continue to make the same amount of money (more even) if people stop texting and stop calling and just do those things using data. If some foreign operators didn't get this message some time ago they weren't paying attention.

Aside from the ridiculous gouging for international calls, there's the obvious--cell phone calls are barely understandable. The quality is laughable and hasn't improved in a decade. I keep a home phone line just so I can make calls that I can here. Of course right next to it is my office phone that uses 8x8's IP service.

If operators can get HD voice options, including VoLTE, going they might be able to drag this out a little longer. At best.
Flash Poll
From The Founder
The New IP is actually bigger even than business. Like another hugely important tech that Light Reading is digging into right now, the New IP has the potential to change the world by fundamentally advancing what it is possible for people to achieve with communications.
LRTV Huawei Video Resource Center
Huawei Shares Its Vision of the Future of Mobile Networks Innovations

2|26|15   |   2:30   |   (0) comments


Mobile broadband is changing our lives. It's reshaping the Internet, industry, and society. It allows us to freely connect with one another anytime, anywhere. At this year's Mobile World Congress, Huawei will share its latest insights and newest ideas and technologies that will shape the future of MBB. They will showcase their end-to-end MBB solutions that will ...
LRTV Huawei Video Resource Center
Accelerate Digitizing, Boost Digital Business

2|26|15   |   6:14   |   (0) comments


A new digital revolution is leading us to a better connected world. Together with millions of digital partners, Huawei will help CSPs to build their digital service ecosystem and aggregate a wide variety of digital services. In this video, we find out how Huawei is going to help CSPs implement digital operations.
LRTV Huawei Video Resource Center
The Secret Recipe to Enabling Hyper-Growth Industries

2|26|15   |   3:38   |   (0) comments


With a number of successful cases on network capability exposure, Huawei is going to share the secret recipe to enabling hyper-growth markets with a step-by-step approach.
LRTV Documentaries
BTE 2015 Is Bigger & Even Better

2|25|15   |   03:13   |   (4) comments


This year's Big Telecom Event (BTE) in Chicago is going to provide more opportunities than ever for networking, getting to grips with key industry challenges and opportunities and, equally as important, having some fun.
LRTV Interviews
Light Reading ICT Leaders Roundtable at MWC 2015

2|12|15   |   1:07   |   (2) comments


On Sunday March 1, 2015, Light Reading will host an ICT Leaders Roundtable in partnership with Huawei. At this half-day event, CIOs, analysts and researchers will discuss key industry trends like virtualization in the cloud with a specific focus on new business models. Located at the luxurious Renaissance Hotel near the Fira Barcelona, space is limited so please ...
LRTV Documentaries
Going Green in 2015

2|12|15   |   02:04   |   (0) comments


Energy efficiency is set to be an incredibly hot topic in the telecom industry this year.
LRTV Custom TV
SDN & NFV: Where Are We Going From Here?

2|11|15   |   11:27   |   (0) comments


Vitesse Semiconductor CTO Martin Nuss gives his perspective on why SDN and NFV should be tightly interconnected and how he sees the industry moving forward.
LRTV Documentaries
Time for Gigabit Europe?

2|9|15   |   01:27   |   (4) comments


Gigabit broadband networks are springing up all around the US and they'll soon become more commonplace in Europe.
LRTV Interviews
Brocade Brings New IP Vision to 2020 Vision Executive Summit

2|3|15   |   4:23   |   (0) comments


In December 2014, Light Reading gathered telecom executives in Reykjavik, Iceland to discuss their vision for high-capacity networks through the end of the decade. The intimate, interactive meeting was set against the backdrop of Iceland's spectacular natural beauty. As one of the event's founding sponsors, Brocade's Kelly Herrell shared his company's strategy at ...
LRTV Interviews
Brocade's Kelly Herrell on the New IP

2|2|15   |   12:36   |   (0) comments


In December 2014, Steve Saunders sat down with Brocade VP of Software Networking Kelly Herrell at Light Reading's 2020 Vision executive summit in Reykjavik, Iceland. They spoke about Brocade's approach to the New IP, the future of the telecom industry, and more.
LRTV Huawei Video Resource Center
Dr. Dong Sun Talks About Carriers' Digital Transformation & Huawei’s Telco OS

1|29|15   |   6:28   |   (0) comments


Dr. Dong Sun, Chief Architect of Digital Transformation Solutions at Huawei, discusses how telecom operators can become digital ecosystem enablers and deliver optimal user experiences that are in real-time, on-demand, all-online, DIY and social (ROADS).
LRTV Huawei Video Resource Center
Huawei's Chief Network Architect Talks about Network Experience & Operators’ Strategies

1|29|15   |   3:39   |   (0) comments


In the digital age, network experience has become the primary productivity especially for telecom operators. In this video, Wenshuan Dang, Huawei’s Chief Network Architect, discusses how carriers can tackle the challenge of infrastructure complexity in order to enhance business agility and improve user experience.
Upcoming Live Events
March 17, 2015, The Cable Center, Denver, CO
April 14, 2015, The Westin Times Square, New York City, NY
May 12, 2015, Grand Hyatt, Denver, CO
May 13-14, 2015, The Westin Peachtree, Atlanta, GA
June 8, 2015, Chicago, IL
June 9-10, 2015, Chicago, IL
June 9, 2015, Chicago, IL
June 10, 2015, Chicago, IL
All Upcoming Live Events
Infographics
Net neutrality, broadband services and the current outlook on data consumption, as presented by the New Jersey Institute of Technology.
Hot Topics
Cyber Security Expert Warns: You're Doing It Wrong
Sarah Thomas, Editorial Operations Director, 2/23/2015
10 Weirdly Useful IoT Devices
Eryn Leavens, Copy Desk Editor, 2/24/2015
Small Cells Enabling Location Services
Sarah Thomas, Editorial Operations Director, 2/25/2015
Is FCC Weighing Net Neutrality Changes?
Mari Silbey, Independent Technology Editor, 2/25/2015
MWC: Let the Madness Begin
Ray Le Maistre, Editor-in-chief, 2/23/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
Check out Light Reading's interview with Jay Samit, the newly appointed CEO of publicly traded SeaChange International Inc. With a resume that includes Sony, EMI, and Universal, Samit brings a reputation as an entrepreneur and a disruptor to his new role at the video solutions company. Hear what he had to say about the opportunities in video, as well as the outlook for cable, telco, OTT and mobile service providers.
G'day! And welcome to an entirely new feature on Light Reading -- our weekly "CEO-to-CEO" interview.