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MOBILE VOICE:

THE FUTURE OF MOBILE VOICE

Pyramid Research
Market Study  March 2005

Single user PDF - USD 1.99  

Table of Contents

Executive SummaryMobile voice has evolved from a luxury product into one of the world’s most widely used services. However, Hyper-competition and price declines have nudged mobile voice closer to commoditization, creating an environment where voice on its own is no longer a potent driver of service differentiation. While service providers continue to develop strategies leveraging voice to create unique value for the end-user, voice is increasingly given away under competitive pressure. Yet, established service providers have networks to maintain and cannot play the discount game forever. More drastic measures are required, generally built around mobile Voice-over-IP and fixed-mobile convergence, which promise to bring mobile voice usage and revenues to a new spiral of growth –whether delivered by mobile or fixed service providers. Our assessment of the future of mobile voice makes the following points:• Mobile voice revenue growth is slowing. Make no mistake, mobile voice traffic and revenue will continue to grow across all global markets, with total revenue reaching $700bn in 2009 from $500bn today – over and above the total size of fixed-communications markets. But only in emerging markets will this growth remain in double-digits. In more developed markets, voice is running out of steam. Largely due to plummeting prices and the growing number of contenders for the mobile revenue pie, voice ARPS – whether at $45/month in Japan or $9/month in China - has nowhere to go but down. • Voice IS a commodity. Competitive, regulatory and technology pressures have spawned a dynamic of voice commoditization, creating a marketplace where voice services alone are no longer enough to create some differentiation. Mobile voice shows all the signs of a commodity service: it is mass-produced by a large number of players, has few or no differentiating features, creates little loyalty among end-users. • Mobile service providers have excelled at employing creative pricing strategies to stem a decline in voice ARPS. From large volume voice bundles and free weekends, to creative bundling of voice usage with data and traffic load management pricing plans, operators have been extremely creative in developing a wide array of tariff plans and structures. Today, the most successful strategies have one thing in common: they provide end-users with flexibility and a perception of good value for their money.

• MVNOs - If you cannot beat them, join them. MVNOs are firmly in place in Europe, and are preparing to make a mark in the US. They are often hard to beat on cost, and often benefit from such competitive measures as mobile number portability. Fighting fire with fire has proven to be the best way for European service providers to compete. • Mobile voice is no longer the exclusive right of mobile network operators. In the changing convergent world, fixed-line providers and ISPs are becoming equipped with technologies for offering mobile voice. In our opinion, mobile operators can hardly afford to miss the train and their delivery networks must transform to include WLAN, along with other new technologies.• The future of mobile voice is with IP, but the value of mobile IP voice will be initially extracted from the integration of WLAN with cellular. Today, the cost saving promise of mobile IP networks does not stretch to voice, as mobile VoIP lacks spectrum efficiency, a key requirement in providing voice services. But the business case for voice migration is not lost in the short term: mobile voice over WLAN for enterprise is the most immediate opportunity, and unlicensed mobile access (UMA) for consumers is also showing promise.• Mobile IP voice provides an immediate opportunity for customer retention through differentiation. New IP technologies are finally at the stage when they can allow service providers to create unique services tailored to the needs of individual users, which will combine mobile voice with multimedia services, such as video and messaging. Evidence from the fixed-line sector shows that bundled services offer sharp reductions in churn and have positive impact on ARPS. Perhaps, the future of mobile voice is to be sacrificed via bundling with other services. If it wins revenue growth and customer loyalty for mobile service providers, then the sacrifice is well worth making.

Overview

Voice remains the bread and butter of the mobile business, but the revenues derived from it are increasingly coming under pressure as subscriber growth rates slow down and voice average revenue per subscription (ARPS) decline. We wrote this report to provide a comprehensive analysis of changing voice market dynamics, including subscriber, revenue and usage forecasts by region, as well as the impact of pricing strategies rolled out by service providers to reverse the decline of MOU and voice ARPS.

We also explored the market changes that follow the introduction of wireless IP technologies, such as WLAN. IP technologies that are just making their way to the markets are both a threat and opportunity for mobile providers. They enable fixed-line players and ISPs to offer mobile solutions, which have previously been exclusive to mobile operators. At the same time, their adoption has substantial benefits for cellcos. We provide analysis of both cases, to assess the impact of market adoption of the new technologies.

In this report we will answer two key questions: what will happen to the mobile voice, and where will voice traffic growth and revenue come from? Is mobile voice slated to suffer the fate of fixed voice, a commodity offered at flat rates to sell multimedia services? Forecasts for the adoption of UMA – residential convergent service rollout, as well as forecasts for the adoption of voice over WLAN by enterprise customers globally are included in the report.

Key Objectives

• We review major global trends for mobile voice growth.

• We analyze and benchmark major pricing strategies deployed by service providers in various regions.
• We analyze the business and regulatory drivers of mobile voice in developed markets.
• We examine the impact of fixed-mobile substitution on mobile traffic and revenue.
• We assess the impact of future IP services, such as Voice over WLAN and UMA, on mobile operator’s revenue.
• We review the implications of IP convergence on the mobile operator business.

Target Audience

• Vendors

This report will help you benchmark your pricing strategies with those of mobile providers across all developed regions. It will also help you assess the impact of new mobile IP technologies on pricing, competitive market dynamics and revenue streams.

• Fixed Service Providers

This report will help you assess the impact of new IP technologies on the mobile service provider business case, as well as the opportunities they present for fixed-line providers and ISPs.

• Vendors

This report will help you understand major drivers and inhibitors of mobile voice growth in different regions, as well as mobile provider plans and considerations behind launching new IP technologies.

• Financial Institutions

This report will help you understand the impact of future technologies on mobile service providers’ revenue and profitability.

 

For full details, please email michellen@cmsinfo.com

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