& cplSiteName &

Indian Telcos to Fight OTT Battle With VoLTE

Gagandeep Kaur

As India's operators expand their 3G and 4G networks, they are inadvertently helping the OTT players, their new rivals, to reach more customers with higher-quality services.

Mobile messaging upstarts, such as WhatsApp, Viber, Facebook and Skype Ltd. , have been reporting a dazzling rate of growth in India. WhatsApp, which was acquired by Facebook last year, has more than 70 million subscribers in India, and is used by 64% of mobile Internet users and making it the country's most popular messaging service. Used by 53% of mobile Internet users, Facebook Messenger is a close second, according to the latest data.

Reach of Selected Mobile Messengers 2014
Source: Statista
Source: Statista

These services have been making a huge dent in the SMS revenues of the operators. Traffic volumes had fallen from around 5.3 billion messages in June 2013, when SMS was a key revenue generator for an Indian operator's non-voice business, to 4.3 billion in June 2014, according to a report from the Telecom Regulatory Authority of India (TRAI) .

But the OTT players have now struck where it hurts the most -- at operators' voice revenues. Between 70% and 80% of revenues for an Indian service provider comes from voice services. With the launch of the WhatsApp voice-calling feature a few months ago, operators stand to lose a significant chunk of those revenues.

VoIP technology is hardly a new thing in India, of course. But while users have been taking advantage of VoIP for some time, most calls until now have been international. That has had little impact on the traditional service providers, which generate just 4-5% of their revenues from international calls.

Services from the likes of WhatsApp have yet to make a huge impact on operator revenues. That is partly because connections are lost and quality suffers when users move outside WiFi coverage. But as these services mature and come to rely more heavily on the growing availability of 3G and 4G networks, they will invariably become a much bigger threat.

Want to know more about 4G LTE? Check out our dedicated 4G LTE content channel here on Light Reading.

Operators are increasingly looking to voice-over-LTE (VoLTE) technology as a potential savior. The thinking is that VoLTE -- which allows 4G networks to support voice calls -- will help operators to provide voice services at a much cheaper cost to customers. Although prices in India are among the lowest in the world, traditional voice services are thought to be at least ten times as expensive as those offered by OTT players.

"I believe VoLTE is a major opportunity for Indian telcos to at least partially recover the market they have lost to OTTs," says Deepak Kumar, the founder analyst of market-research firm BusinessandMarket. "These developments are part of the bigger changes taking place in the industry like IP-fication and upgrading of the network. Once these technological improvements pick up, the telcos are likely to experiment with VoLTE to defend their turf."

In such a scenario, it will make greater sense -- in the long run -- for Indian operators to move 2G subscribers using 900MHz and 1800MHz spectrum on to their 4G networks, and then re-farm the 2G frequencies to support more profitable services in the Internet of Things and cloud services markets.

"Indian telcos are definitely exploring the VoLTE option because the time is not far off when VoIP calls will significantly bring down their revenues," says a senior executive from a Tier 1 telecom equipment maker. "Yes, the data revenue is increasing but not at the pace where it can compensate for the loss of voice revenue."

— Gagandeep Kaur, contributing editor, special to Light Reading

(1)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
User Rank: Light Sabre
10/9/2015 | 8:48:14 PM
It's surprising how long dedicated voice lines have lasted...
It's a little strange that "phone numbers" still exist now that "voice apps" are becoming popular. At some point, I assume it will sound very old to ask someone for their phone number -- instead of their WhatsApp or FB or Snapchat or whatever connection.
Featured Video
From The Founder
Light Reading is spending much of this year digging into the details of how automation technology will impact the comms market, but let's take a moment to also look at how automation is set to overturn the current world order by the middle of the century.
Flash Poll
Upcoming Live Events
November 30, 2017, The Westin Times Square
December 5-7, 2017, The Intercontinental Prague
March 20-22, 2018, Denver Marriott Tech Center
May 14-17, 2018, Austin Convention Center
All Upcoming Live Events
SmartNICs aren't just about achieving scale. They also have a major impact in reducing CAPEX and OPEX requirements.
Hot Topics
Juniper's New Contrail VP Hails From Google
Craig Matsumoto, Editor-in-Chief, Light Reading, 11/15/2017
Eurobites: Telefónica Reckons Plastic Is Fantastic for FTTH
Paul Rainford, Assistant Editor, Europe, 11/15/2017
AT&T's Lurie Leaps to Synchronoss as New CEO
Dan Jones, Mobile Editor, 11/17/2017
Animals with Phones
Live Digital Audio

Understanding the full experience of women in technology requires starting at the collegiate level (or sooner) and studying the technologies women are involved with, company cultures they're part of and personal experiences of individuals.

During this WiC radio show, we will talk with Nicole Engelbert, the director of Research & Analysis for Ovum Technology and a 23-year telecom industry veteran, about her experiences and perspectives on women in tech. Engelbert covers infrastructure, applications and industries for Ovum, but she is also involved in the research firm's higher education team and has helped colleges and universities globally leverage technology as a strategy for improving recruitment, retention and graduation performance.

She will share her unique insight into the collegiate level, where women pursuing engineering and STEM-related degrees is dwindling. Engelbert will also reveal new, original Ovum research on the topics of artificial intelligence, the Internet of Things, security and augmented reality, as well as discuss what each of those technologies might mean for women in our field. As always, we'll also leave plenty of time to answer all your questions live on the air and chat board.

Like Us on Facebook
Twitter Feed
Partner Perspectives - content from our sponsors
The Mobile Broadband Road Ahead
By Kevin Taylor, for Huawei
All Partner Perspectives