Light Reading
The 550% growth in mobile VoIP is hurting mobile operators, even though the OTT providers aren't seeing much revenue

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.
Educational Resources
sponsor supplied content
Educational Resources Archive
Flash Poll
From The Founder
It's clear to me that the communications industry is divided into two types of people, and only one is living in the real world.
LRTV Custom TV
Using Service Quality to Drive WiFi Monetization

10|22|14   |   6:51   |   (0) comments


Live from the SCTE conference: Heavy Reading's Alan Breznick explores the forces shaping the WiFi opportunity in an interview with CableLabs' Justin Colwell and Amdocs' Ken Roulier.
LRTV Custom TV
Distributed Access Architectures – 2

10|21|14   |   8:51:00 AM   |   (0) comments


ARRIS CTO Network Solutions Tom Cloonan discusses why many if not most MSOs will continue with integrated CCAP, while addressing why some are also looking at two futuristic, distributed access architectures: Remote PHY and Remote CCAP.
LRTV Custom TV
Distributed Access Architectures – 1

10|21|14   |   9:01   |   (0) comments


SCTE Sr. Director of Engineering Dean Stoneback discusses the pros and cons of distributed access architecture (DAA) and its various forms, which range from basic Remote PHY to full CMTS functionality in the node.
LRTV Custom TV
The WiFi Road to Riches – 2

10|21|14   |   3:58   |   (0) comments


ARRIS Senior Solution Architect Eli Baruch talks about how MSOs can enable public and community WiFi through 1) outdoor access points, 2) businesses seeking to offer WiFi to customers, and 3) residential WiFi gateway extensions.
LRTV Custom TV
The WiFi Road to Riches – 1

10|21|14   |   10:15   |   (0) comments


SCTE Director of Advanced Technologies Steve Harris discusses WiFi deployments, drivers, challenges and advances, including 802.11ac, carrier-grade WiFi, community WiFi, Hotspot 2.0, Passpoint, WiFi-First and voice-over-WiFi.
LRTV Custom TV
Advantech Accelerates 100G Traffic Handling

10|17|14   |   7:56   |   (0) comments


Paul Stevens from Advantech explains why handling 100GbE needs a whole new platform design approach and how Advantech is addressing the needs of equipment providers and carriers to give them the flexibility and performance they will need for SDN and NFV deployment.
LRTV Huawei Video Resource Center
Holland's Imtech Traffic & Infra Discusses Huawei's ICT Solution and Services

10|16|14   |   4:49   |   (0) comments


Dimitry Theebe is from the business unit at Imtech Traffic & Infra which delivers communications solutions for transportations. His partnershp with Huawei began about a years ago. In this video, Theebe speaks more about this partnership and what he hopes to accomplish with Huawei.
LRTV Huawei Video Resource Center
Huawei's Comprehensive Storage Solutions Vital for SVR

10|16|14   |   6:16   |   (0) comments


SVR Information Technology provides cloud services for academic and special sectors. With Huawei's support, SVR and Yildiz Technical University has established Turkey's largest and most advanced High Performance Computing system. CSO Ismail Cem Aslan talks about what he hopes Huawei's OceanStor storage system will bring for him.
LRTV Huawei Video Resource Center
Mexico's Servitron's Impression of Huawei at CCW 2014

10|16|14   |   6:35   |   (0) comments


Servitron is a network operator in Mexico that has been in the trunking industry for the past 20 years. Its COO, Ing. Ragnar Trillo O., explains at Critical Communications World 2014 that his company has been interested in the long-term evolution of LTE technology and its adoption for TETRA.
LRTV Huawei Video Resource Center
Building a Better Dubai

10|16|14   |   2:06   |   (0) comments


Abdulla Ahmed Al Falasi is the director of commercial affairs, a telecommunications coordinator for the government of Dubai. Their areas of service span across multiple industries, including police, safety, shopping malls and more. In this video, Abdulla talks about his department's work with Huawei.
LRTV Huawei Video Resource Center
Huawei Lights Up Malaysia Partner Maju Nusa

10|16|14   |   1:59   |   (0) comments


Malaysia's Maju Nusa is an enterprise partner to Huawei in networking, route switches and telco equipment. At this year's Critical Communications World in Singapore, CTO Pushpender Singh talks about what Huawei's eLTE solutions mean to his company and for Malaysia.
LRTV Custom TV
Evolving From HFC to FTTH Networks

10|15|14   |   2:19   |   (0) comments


Cisco's Todd McCrum delves into the future of cable's HFC plant, examining how DOCSIS 3.1 and advanced video compression will extend its life and how the IP video transition will usher in GPON and EPON over FTTH.
Upcoming Live Events
October 29, 2014, New York City
November 6, 2014, Santa Clara
November 11, 2014, Atlanta, GA
December 2, 2014, New York City
December 3, 2014, New York City
December 9-10, 2014, Reykjavik, Iceland
February 10, 2015, Atlanta, GA
June 9-10, 2015, Chicago, IL
Infographics
WhoIsHostingThis.com presents six of the world's most extreme WiFi hotspots, enabling the most epic selfies you can imagine.
Hot Topics
Google: Carriers & Cloud Providers Need to Cooperate
Mitch Wagner, West Coast Bureau Chief, Light Reading, 10/16/2014
Could Data Be the New 'Currency'?
Ray Le Maistre, Editor-in-chief, 10/16/2014
iPad Air 2 Lets Users Switch Carriers Any Time
Mitch Wagner, West Coast Bureau Chief, Light Reading, 10/17/2014
CBS Takes OTT Plunge
Mari Silbey, Independent Technology Editor, 10/16/2014
NYC Subway Wireless No Cure for Ebola Fears
Dan Jones, Mobile Editor, 10/16/2014
Like Us on Facebook
Twitter Feed