The future of VoIP. European Summit 2013: Enabling innovation, driving profitability. Stephen Sale. The future of VoIP.

Transcription

1 The future of VoIP European Summit 2013: Enabling innovation, driving profitability The future of VoIP 10 October 2013 Stephen Sale EVENT PARTNER:

2 The future of VoIP 2 Current trends in voice services Technological enablers The challenge for telcos Discussion

3 Minutes per month The future of VoIP 3 Current use cases for voice are pretty much saturated Figure: Average voice usage on a smartphone in Western Europe IP voice CS voice

4 Minutes per month Messages per month The future of VoIP 4 but messaging is showing strong growth Figure: Average voice usage on a smartphone in Western Europe 250 Figure: Average messaging usage on a smartphone in Western Europe IP voice CS voice 100 IP SMS

5 The future of VoIP 5 Why almost 90% of smartphone owners do not currently use mobile VoIP apps Figure: Reasons given by VoIP service users for not using VoIP on a mobile handset Reason I have plenty of minutes in my contract 22% I am trying to limit my data usage 16% I see no benefit from using VoIP 15% VoIP is not reliable enough on a handset 12% VoIP is too complicated to set up on my phone 10% I don't trust the companies that run VoIP services 2% Other 11% Unsure 13% Percentage of respondents Question: Why don't you use a VoIP application on your phone? (please select all that apply) ; n = 521; respondents with a smartphone who used VoIP on a device, but not their smartphone.

6 The future of VoIP 6 End-user drivers in the IP communications market Price Appeal of low-cost or free services What is the perceived value of voice? Feature developments from both OS and app providers Focus on user experience Application integration Features Community dynamics Communications activity associated with online communities and standalone apps Friends and family calling circles

7 The future of VoIP 7 There are different dynamics in different services Price Features Community dynamics Voice Bandwidth requirements means OTT VoIP over cellular is currently not very appealing Tariff rebalancing will see prices fall further Little innovation so far Limited multi-device opportunity Operators control means for differentiation Strong claim for universality; requires broad addressability Full service substitution is unlikely for most Messaging SMS perceived as expensive Availability of very cheap services (low barriers to entry) High rate of innovation over last two years Demand for multi-device access Fit with other IP services Relatively recent medium with greater concentration of usage Full service substitution is feasible for many Video Perceived as a free nonoperator service on fixed/wi-fi Difficult to guarantee user experience in mobile High rate of innovation over last two years Potential demand for multi-device access Fit with other IP services Little established usage Likely to relate to online communities, but also conventional friends and family

8 The future of VoIP 8 Current trends in voice services Technological enablers The challenge for telcos Discussion

9 LTE share of mobile connections (handsets and broadband) The future of VoIP LTE makes cellular VoIP more viable and potentially opens the door to innovation Cellular networks are getting faster (speed) and quicker (latency) improving the user experience of VoIP Price per GB is also decreasing making the mobile VoIP proposition more appealing Potential for operators LTE voice experience to be relatively poor (via CSFB, in-building coverage) Fertile ground for improvements to OTT services, e.g. a big play from Google, and innovation from smaller players? Figure: LTE share of mobile connections, by region 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

10 The future of VoIP 10 Early adopters of VoLTE are using it to differentiate 4G VoLTE offers benefits over VoIP over LTE such as improved battery life, better performance at cell edges, managed QoS. VoLTE plans are currently being led by spectrum strategies. Most operators do not have a meaningful voice strategy. Early launches have been from CDMA operators that are struggling to compete against HSPA and are keen to refarm spectrum. VoLTE (and RCS) used to differentiate next-generation communication services on 4G in lieu of a killer app. Figure: Selected VoLTE announcements Event Date Verizon Wireless completes first VoLTE Call Feb 2011 SK Telecom deploys first HD VoLTE service LG Uplus launches VoLTE service Aug 2012 MetroPCS (US) launches limited VoLTE service Aug 2012 Korea Telecom launches VoLTE Oct 2012 EE (UK) announces network upgrades to provide support for new services including VoLTE April 2013 Mobily (Saudi Arabia) completes VoLTE trials May 2013 Bharti Airtel (India) requests permission to trial VoLTE July 2013 O2 Germany to demo VoLTE Q China Mobile to launch VoLTE Q4 2014

11 Smartphones (million) The future of VoIP VoLTE is a medium-term option for most but plans remain vague European operators are under less spectrum pressure and are viewing VoLTE as a long-term migration rather than urgent requirement. Interoperability is more of an issue Question marks remain over interconnection and roaming IMS business case harder to make without significant cost savings/revenue upside. Co-ordination with fixed network developments could speed up rollout but we do not expect widespread deployment in Western Europe until Figure: Smartphones by default voice service, Western Europe Circuit-switched voice VoLTE 11

12 The future of VoIP 12 WebRTC threatens to further disrupt the value chain WebRTC is a new standard for peer-topeer voice and video communications. It makes communication capabilities available to web developers using common tools such as JavaScript and run directly from the web browser. It will potentially be very easy (and inexpensive) to add communication capability to a browser-based application. WebRTC challenges established business models, including that of the major overthe-top (OTT) players, and promises to further disrupt the value chain. Many players see it as an opportunity to cement or reassert their position in the market.

13 The future of VoIP 13 but offers operators a potential role Operators can play three main roles in WebRTC: Service providers. Operators can extend their own IP-based communication services to multiple devices by supporting WebRTC. Communications infrastructure providers (numbering, signalling, traffic shaping etc.) Communications platform providers. Operators can incorporate WebRTC into their APIs for developers to access their customers with third-party services. Browser Web APIs Media engine GUI Figure: Basic outline of a WebRTC deployment Web server with WebRTC control Internet Gateway Browser Web APIs Media engine GUI Mobile network PSTN VoIP

14 The future of VoIP 14 Current trends in voice services Technological enablers The challenge for telcos Discussion

15 Audio Text Low Medium High One to one One to few One to many The future of VoIP New devices are bringing a variety of communication services into competition 15 Collocation on the handset means that individual communication services are in direct competition for the first time. Smartphones give each service mobility and therefore (potential) immediacy. Telephony is the legacy audio service; is the dominant text-based communication service and offers flexibility in terms of audience and immediacy. Other services are beginning to populate other niches, particularly in text-based communications. Many services coexist within a single user interface. Figure: Attributes of various communication services Mode Immediacy Audience Traditional voice VoIP Audio messaging SMS IM Twitter Social networking

16 The future of VoIP 16 Who will expand and explore the use cases for voice?

17 The future of VoIP 17 Who will expand and explore the use cases for voice? Proliferation of devices

18 The future of VoIP 18 Who will expand and explore the use cases for voice? And changing contexts How social will voice become?

19 Number of customers The future of VoIP Operators need to balance retail and wholesale approaches to the opportunity 19 Third party Third party Third party APIs Operator communication services platform Third party retail services Operator retail services Innovators Early adopters Early majority Late majority Laggards

20 The future of VoIP 20 Current trends in voice services Technological enablers The challenge for telcos Discussion

21 The future of VoIP 21 Some discussion points Will the transformations that we have seen in text-based communications also occur in voice/audio? Will conservatism win out as the millennial generation grows up? What proportion of voice minutes will be associated with online activity in 1/3/5 years? How much do customers really value interoperability? security/privacy? identity management? What market share can operators expect to maintain in voice services? Retail share? Wholesale share?

22 The future of VoIP 22 Contact details Stephen Sale Principal Analyst Boston Tel: Fax: Cambridge Tel: +44 (0) Fax: +44 (0) Dubai Tel: +971 (0) Fax: +971 (0) Dublin Tel: +353 (0) Fax: +353 (0) Edinburgh Tel: +44 (0) Fax: +44 (0) London Tel: +44 (0) Fax: +44 (0) Madrid Tel: Fax: Manchester Tel: +44 (0) Fax: +44 (0) Milan Tel: Fax: New Delhi Tel: Paris Tel: +33 (0) Fax: +33 (0) Johannesburg Tel: Fax: Singapore Tel: Fax: