It’s not like we need reminding that fixed line voice revenue is falling, but in case any telco had the temerity to forget, UK telecoms researcher Ovum says that fixed line voice revenue will fall from $418 billion to just $309 billion by 2014.
Ovum calculates that in 2008, revenues for fixed voice was just 63% of the amount taken by mobile voice services. This is set to drop to 40% by 2014, but Ovum tells us that mobile voice revenues will also be falling by then.
It takes quite a comprehensive model to work that out, and there will need to be all sorts of ameliorating factors in place for all of that to happen ‘ semi-saturated broadband revenues ‘ both fixed and mobile, among them. The presumption is that in most of the big markets there will remain active rivals for the space and that competitive pressures will drive down revenues on basic services, though in our humble opinion it’s likely that revenues across multiple operators will not fall, but rise slightly, as web delivery content services, video, music and gaming, along with social networking data services and other broadband, all grow and add to basic voice and data.
Of course in some parts of the world there is little competition and prices will remain high, but Ovum doesn’t think this will happen in many of the major ones.
‘Fixed voice lines and revenue declines will vary by market, driven by various factors including differing levels of Fixed Mobile Substitution (FMS), VoIP substitution, operators’ strategies, cultural behavior, economic conditions and existing telecoms infrastructure,’ said
Ovum. In the near term broadband-led VoIP and mobile access substitution will cause further declines in fixed voice channels.
Well a single look at any one of the US or European majors could have told you that ‘ analysts really have a duty of care to say a little bit more we think.
Ovum adds that substitution from VoIP and naked DSL will also continue, although this effect will vary substantially from country to country, depending on the commitment larger players have to VoIP services, and on whether or not Naked DSL has been mandated by national regulatory authorities. By naked DSL it means telco twisted pair lines where you don’t have to take voice services in order to have one.
One interesting thought Ovum gave was that the effects of bundling and flat rate services were already holding up values as much as they could, and said they have now reached their peak effectiveness. This doesn’t sound right, almost no telcos are offering 4 way service bundles, fixed voice, fixed broadband, mobile voice and TV, and none we can find offer what we call the double triple play ‘ voice, broadband data and video on BOTH fixed and mobiles lines ‘ in a single bundle. We reckon with more infrastructure spend and better cross billing and service crossovers, there is tons more that telcos can do.
Ovum says that as mobile broadband takes off there will be more substitution of voice revenues ‘ both fixed and mobile ‘ using mobile broadband. LTE and more advanced HSPA will accelerate this trend.
Finally it says to keep an eye on the metric whereby it’s not fixed lines that are substituted by mobile, but calls, as more calls are made at home from mobiles than by fixed telephony ‘ well what do you think femtocells are for ‘ which means you may have a fixed line, but you will barely ever use it.