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36 | cover story: death of voice


important to note that achieving adequate margins through a standalone voice business is only an option for a carrier capable of carrying high traffic vol- umes. Consolidation is now inevitable, according to Haslam, and national carriers have had to outsource international termination to international wholesalers, further squeezing margins. “In three to five years, there will be a fundamental shift towards end-to-end IP for telephony services. This is the biggest challenge to hit telephony since its inception,” she says.


Consolidation and outsourcing will benefit only a finite number of global carriers. This is certainly an acceptable paradigm for the wholesale market, but in retail, the overriding strategy for achieving growth is very different. IDT, one of the largest prepaid international calling card providers in the world, operates a trading platform in which it buys minutes at a set rate, with the aim of selling on a higher price. “Ultimately, we don’t just rely on trading margins to make a profit,” says Nick Ford, president, carrier services at


Carriers: what percentage of your voice traffic has already moved from TDM to IP?


0-5% = 6%


5-10% = 18%


15-20% = 10%


10-15% = 11%


Above 20% = 55%


IDT telecom. “The better rates we get in the wholesale market for our retail routing means generating more retail minutes for us. The more we can then offer to our wholesale partners, the better rates we generate.” Just like with international wholesale, the


retail value of voice minutes and price per minute is also only decreasing. The difference according to Ford is the increases in volume; the company experienced a 13% year-on-year growth in the last quarter and an 8% increase in revenue. “It’s transforming and moving, not shrinking and falling,” he says defiantly. “Operators do need to realise that, when IP is fully rolled out, infrastructure and interconnec- tion is what makes telecoms work. There is simply no incentive for suppliers to carry competitors’ traffic for free – even in OTT, why should Google terminate traffic from Facebook for nothing?” More of bit pipe than a dumb one then.


Soure: poll on c c The voice market in high definition


While the progression from TDM to IP appears inevitable, market watchers have always expressed questions over the actual quality of a voice call delivered over the internet. The advent of HD voice, being developed by mobile operators globally has been billed as the service to give users something materially different to fixed. HD voice, most recently introduced to


the market by Sprint on its HTC device, gives voice services its biggest upgrade in years. “HD voice can be seen as the trump card in the migration from fixed to mobile,” says Gert Jan Huizer, VP product management and marketing at iBasis. “It cannot be delivered over traditional networks, meaning it has to go through IP. HD voice is actually a big step for mobile networks, and finally provides a viable reason as to why you get a better customer experience on IP rather than fixed. It’s all about perception.” HD voice can presently be experienced


through voice platforms like Skype over a voice over LTE network but mobile


capacity


operators remain limited in developing it on Skype because it is not a conventional telephony system. It can, however, be introduced in voice calls on both digital cellular and satellite communications, when VoIP platforms are rolled out over fibre packet technology. Enabling the retail network, through IP, which is a prerequisite for HD voice, does require substantial investment, and a full IP infrastructure. Michel Guyot, president, global voice solutions at Tata, still doubts the impact such a service will have on declining revenues. “I doubt companies will generate


revenue from HD. It will run as an enhancement to an existing service,” he says. “It is certainly interesting, and there is widely held view that better quality will mean an average call will last longer. It could provide a completely different experience to voice calls.” Despite the hype, networks in the US are


still not developed enough to run HD voice, rendering Sprint’s service utterly useless until at least 2013.


apacitymagazine.c om


The voice evolution Whether it is from solutions company Amdocs, technology innovator Level 3, global carrier Tata, internet sensation Skype or voice carriers IDT and iBasis, one overriding message is clear: the evolution from TDM to IP is now fundamental to all of these companies. An all-IP network is becoming ever more essential, and any maintenance of TDM is a strategy undertaken to eventually exit the voice market. VoIP, as it stands, opens up the market significantly for unified communica- tions, and with a growing commitment from both carriers and mobile operators to IPX, the stage is set for VoIP to be the main- stream voice communication platform. And while it may appear the OTT players


are best positioned to benefit from this, there are still question marks over whether the present OTT business model, largely generating money through advertising, has long term sustainability. “With Skype, for example, you get an indication of how good your voice call is when measured on network quality,” says Shmukler. “The next step for OTT could be offering premium Skype services to guarantee a better experience. The opportunity for the service providers, then, is how to enable this.” An opportunity that Tata would be


more than willing to take up, says Guyot. “They need us, they need interoperability. We may well be the company to bridge the Google Island or the Skype Island. No-one can predict what will happen in such a flat market, with few players, and few revenue generating opportunities - we may even be the last man standing.”


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april/may 2012


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