VoIP Services Represent Strategic Questions

Some 41 percent of European consumers say they use VoIP services , almost double the rate for U.S. consumers. VoIP is big in Europe. The main reasons users are shifting to VoIP include reducing the cost of local and international toll calls as well as gaining the ability to make video calls, says
analyst Jason Armitage.

 

Up to this point, European VoIP services have been a bigger factor for fixed-line voice, but a migration to mobile devices now is underway, despite opposition from the wireless service providers, or at least most of them.
There are some big strategic issues here. If fixed networks cannot rely on voice revenues as part of the expected revenue stream, then today’s “triple play” revenue model becomes a “dual play” revenue model built on broadband access and video, primarily.
That isn’t to deny the future emergence of other significant revenue streams. But you’d be hard pressed to quantify those potential streams in any meaningful way, in the near to medium term.
It should be obvious that earning a financial return on a network with two key services is tougher than for a network with three anchor services. Experienced observers will be quick to note that the new triple play will consist of mobility, fixed line broadband and video. But those revenues will be earned from two separate networks, not from a single network.
That will raise the issue of how to allocate incremental capital between the two different networks. At a more tactical level, the issue is how legacy service providers can compete.
Some service providers have launched their own VoIP services, but early indications are that these services are struggling to match the take-up of consumer VoIP services. The Yankee Group believes it will be challenging for operators to differentiate their own VoIP services and achieve the scale reached by Skype, MSN and Google Talk.
In other words, users might wind up preferring some “over the top” VoIP services provider to an underlying mobile provider’s option. It doesn’t appear there is any easy answer here.
Up to this point, many service providers have restricted use of mobile VoIP services to Wi-Fi connections, or blocked mobile VoIP outright. But Armitage does not believe European service providers will be able to continue blocking over the long term. That means confronting mobile VoIP services head on.