What do you think will VoIP kill the telecom industry.

Mobile phone VOIP is already very popular in Singapore and ASEAN locations since 2003, due to labour population calling into Gulf or the USA, UK or Australia. In India, the call rates are already less expensive, so most of the Indian telco's don't see this as a revenue stream to launch. The trends in India are comparatively different from our neighboring countries.

As per my Experience with VOIP, It is a cheaper technology, which will help the Telecom Companies in earning bigger revenues, as per current industry growth ARPU of customers on mobile is Rs.235. Companies are trying to sell value added services, on the oder hand in Data services, like broadband internet ARPU is high around Rs.800-Rs.1000. With VOIP comming into the place more work can be done through VOIP and Internet, thus a bundled service can increase the ARPU and customer base,

For Example 1 World Phone Connection with unlimited US/UK calling is for Rs.1500 p.m, thus revenues are bigger as compared to mobile business

Companies would be required to invest in huge amounts in WiMax, as Mobile Wimax is the technology that can make VOIP to happen at greater sucess, currently VOIP is gaining advantage. Thus for high ARPU better services needs to be provided.

Hi Mr.Shyamal,

Thanks for your appreciation.

 I agree that mobile VOIP can see some growth in near future. But the biggest hurdle for VOIP growth is its dependence on the 3rd party internet services in countries like India. Even with recent inflationary pressure, crude oil sky rocketing, rupee loosing ground in exchange market, the long term growth trejactory of Indian telecom stays very much intact.

India is now 2nd largest mobile handset user market, and if we look at penetration levels, it is less than 5% in over all indian geography.

the point which i am trying to make is, in a country which is 2nd largest in mobile handset users, it has penetration level of less than 5%, how can VOIP which needs high speed consistent internet access, can grow?

unless and until we see a sudden change in strategy by telecom players and urgency in increasing the broadband penetration, installation of more and more Wimax and Wifi Hot spots in the country, VOIP in india will keep getting a step son treatment.

However the markets where the penetration of broadband is high along with leniency in telecom policies to give some space to VOIP providers, the VOIP players can still have something to cheer about.

Great answer shad...

very meticulously answered...

In my opinion mobile VoIP will become front and center in 2008 whereas consumer VoIP might make some headway in 2008.

Another big industry question mark is Skype and ebay. eBay’s difficulty has come in trying to monetize a free service; it will be interesting to see if other content providers think Skype might be worth their while...

VoIP as a technology is one of the cheapest communication technologies, especially for long distance telephony. It has been getting popularized and widely used all over the world. But somehow it still has not got the acceptance and attracted demand as much as GSM or CDMA mobile communications.

There have been various reasons for the same in my view. To explain the reason, I will take example of Indian market where selective VOIP services were legalized in 2002. I got the opportunity to work with one of the pioneers of this technology in India and that too in 2002 itself. We had launched the services at national level under the brand name Phonewala and used to charge Rs.4.95/minute for a call to US against the existing rate of some Rs.24/min at that time.

As a point of attraction, this was more than enough to catch million eyeballs who had friends, relatives and business in US! Similarly rates to many other destinations were almost 75-80% less than the normal existing phone rates.

But the good story ended here only.

• Lack of high quality internet penetration, especially broadband in cat B and C towns;
• Lack of awareness about usage of PC-to-Phone service and various other value add service and features available on VOIP;
• Lack of POS of service and adequate back up support;
• Lack of understanding of conditions and rules put down by regulatory bodies;

All these did not let VOIP to grow to its true potential.

States like Punjab, Gujarat, Kerala, who have some of the highest NRI populations were like gold ducks, ready to be trapped, but the non-availability of internet spoilt the whole game.

In global scenario also, to an extent VOIP has not been able to grow because of the same reasons. VOIP is not a service for developed countries, where there is an open market policy in telecom sector, have various telecom service providers and have a continuous price war leading to dirt cheap international call rates.

Another issue, which doesn’t help VOIP to grow as much as it’s potential, is the liberalization and opening of economies to promote mobile telephony. With increasing competition, the ISD call rates keep coming down.

This phenomenon is especially evident in high growth economies like India; where mobile penetration has seen near exponential growth in past couple of years and still increasing. This has led to increased competition and slashing of prices left and right. From the times when a call to US used to cost Rs.24 per minute to today, when u can make a call at just Rs.2/min from a mobile phone, mobile telephony has come a long way and thus almost killing the VOIP in the consumer segment.

If we analyze and see the growth and potential of VOIP, it’s a technology which is flourishing and proving profitable for services providers in markets which can be termed as ‘sellers market’. Countries with high entry cost in telecom vertical, having either high expatriate population or high immigrant population, monopolistic nature of market with restrictive regulations are the countries where VOIP can be a high revenue generation service.

Places like the gulf countries, Vietnam, etc, where the VOIP is still not a legal service and have fewer telecom players, are the countries with true potential for growth of VOIP.

But the growth will only last for as long as these markets remain monopolistic and don’t allow more mobile operators to spread there wings leading to price war.

A research conducted by Premetrica Inc, (http://www.telegeography.com/press/releases/2005-12-15.php) in 2005 showed Brazil, Nigeria and Bangladesh as the top 3 fastest growing VOIP markets in the world with growth rates of 112, 103 and 97% respectively. Incidently there was no developed country in the top 10 destinations.

This further proves the fact the VOIP is not going to see any considerable growth in the developed markets and will keep diminishing from the developing nations.

In my view, VOIP will never become the preferred mode of communication especially in the consumer segment as more and more mobile operators grow, as a result of opening of telecom markets worldwide. However it will keep playing a supporting role in the SME/SOHO and mid size corporate segment who have international business operations spread worldwide or companies having Pan-country operations having multiple branches across the nation.

But the brands like Efonica, Skype, Vonage, or the home grown Phonewala etc will keep the market buzzing and VOIP in news; but can never prove to be threat to mobile or landline phones!

I think the current slump is not because of spread or acceptance of VOIP, but near saturation of developed markets, consolidation of big telecom players and slow opening of restricted markets with high potential.

The reasons why Vodafone started looking towards Asian market and landed up taking over Hutch is because of the near penetration levels it reached in its European markets, where it played a near dominant role and had not seen any consideration increase in acquisition numbers nor growth in ARPU for quite sometime.

Further actions like Saudi Arabia and Bahrain’s invitation for 4^th and 3^rd mobile operator respectively, Bharti’s interests to buy stake in MTN, a leading south African telecom player and Ehtisalat’s interest to enter India through equity partnership; all this show that there’s a new potential for growth of mobile services which will now shift towards the developing regions in Asian, Middle East and African regions.

Since these markets had strict regulations for a long time, they will take some time to come out of the monopolistic and dominating mindset to fully liberalize there markets.

Mainly, the flat growth in developed markets due to near saturation in penetration; and slow opening of regulated markets has led to a temporary slump in global telecom market.

But this is a just a temporary phase, as the regulated markets start relaxing there restrictions and get ready to invite more operators in there territory, the global markets will start seeing an uptrend.