In a classic case of a solution waiting for a problem, exhibit A has to be voice over LTE. Infonetics Research just released a report, in which the firm finds that even as VoLTE rollouts start to take off, there is simply no business case for it yet.
There are only eight commercial VoLTE deployments in the world – up from just 4 in 2013 – with tech-savvy South Korea dominating the space with most of the 12 million subscribers worldwide, but Infonetics does expect there to be about 30 commercial VoLTE deployments covering more than 50 million customers by year’s end. That’s still a drop in the bucket when you consider there are billions of cell phone subscribers worldwide.
4G LTE networks are still being built out around the world, especially in Asia-Pacific and Latin America, where rollouts have lagged behind other areas like North America and Europe. Carriers have been spending big bucks on deployment and are looking to recoup that billions of dollars in expenditure any way they can. But should they rely on VoLTE for that ROI?
The answer is probably not today, but eventually carriers will need to take measures to counteract the effects of OTT players that are siphoning off their voice business. The Infonetics report points out that Japanese OTT Line has taken the mobile VoIP crown away from Skype and now claims 300 million subscribers worldwide with 50 million in Japan. It’s gotten to this level by offering in-app purchases such as games and stickers and also providing a premium calling service.
The market for mobile VoIP provided by OTTs will continue to go strong, with Infonetics predicting a 12 percent CAGR through 2018. However, the downside is that since these services are largely free, the business model may eventually collapse, which interestingly paves the way for traditional carriers who are tired of giving up already stagnant voice revenues to the OTT guys.
As the carriers continue their LTE deployments over the next several years, they are still relying on 3G for voice. Given the flat state of voice revenues, and the expense and complexity of moving to an IP Multimedia Subsystem (IMS) – required for VoLTE – this shouldn’t be surprising.
But once they do make the decision to move to IMS – which ABI Research finds is happening – a whole new world opens up that includes rich communications services (RCS), which will give carriers the ability to offer everything the OTT players are today and then some.
Besides the handful of VoLTE already out there, we’ve seen a few more recent announcements. T-Mobile is rolling it out to subscribers in Seattle, but it’s only supported on a few handsets. AT&T is launching the service in areas of four Midwestern states – Illinois, Indiana, Minnesota and Wisconsin – while Verizon has only said it would launch VoLTE sometime by the end of 2014. Outside of the U.S., carriers from Zain Kuwait to SingTel to Bouygues Telecom to NTT DOCOMO and others have made their VoLTE intentions known.
So while customers may not exactly be clamoring for a new delivery mechanism for their voice calls, the carriers see the writing on the wall and many have decided it’s better to suck it up and make the investment in VoLTE than sit around and watch OTTs get more successful at their expense.