Global telcos could raise voice telephone rates: Ovum

Will Singapore telcos jump on the trend to keep sinking revenues afloat?

According to Ovum, the rise of over-the-top (OTT) VoIP services and coinciding decline of voice revenues from traditional telephony will convince operators to roll out price increases.

“Where operators have seen voice telephony as a service without a future, they have chosen to compete on price in an effort to eke out any remaining revenues from the market,” says Jeremy Green, principal telecoms strategy analyst at Ovum. “However, taking such a pessimistic view obscures some important commercial realities and opportunities in the voice telephony market.”

Ovum warns that raising rates is not the best course of action for telcos. "Ovum believes that a focus on creating cloud-oriented telephony apps, and efforts to maintain the relevance of telephone numbers will ensure that operators have a place in the future communications landscape," it said.

Ovum added that OTT VoIP services are not about to replace traditional telephony. It did concede though that the former will have a marked impact on telcos’ revenues over the next eight years. Forecasts from the global analyst firm reveal that OTT VoIP will cost the global telecoms industry $479bn in lost cumulative revenues by 2020, which represents 6.9 percent of cumulative total voice revenues.

The complete collapse of telephony revenues is not likely, according to Ovum, but the long-term trend is towards a richer and more complex communications environment in which voice serves a different function and telephony plays a smaller role.

Ovum’s research shows that users have been heavily influenced by their experiences with OTT players’ services, and now expect traditional operators to provide content, relationships, and history within a service, irrespective of device or access method. As such, Ovum recommends that operators develop or deploy applications that link cloud services with telephony usage.

Ovum also sees the continued existence of the telephone number as a key asset for telcos as it is central to their relationships with their customers.

“The major threat posed by OTT VoIP is that it weakens customers’ attachment to their telephone number and transfers their attachment to a new address. This may turn out to be a more significant factor than the direct impact on telephony revenues,” explains Green. “Operators should use telephone numbers as the identifier and address for cloud-based services, allow customers to choose numbers that are relevant to them, and develop more application-to-person SMS applications.”