Tuesday, November 8, 2011

Is telecom's voice business dead ?

I think sadly YES, many of today’s voice players will be unless they can stop thinking like Telcos and adapt to new market realities – One of the take away from recently held Capacity Asia.

All Telco executives feel that there are still ways to make money in the voice business, but they aren’t the old ways of making money, and voice players better discover new ways and fast. The voice margins already so low, particularly in market like India, that being in the voice business is almost close to “slavery”. There is major impact from OTT players like Skype on the voice business, but Telcos had no one to blame but themselves for Skype’s success at their expense.

The Voice service providers are “so strangled by the telecoms way of thinking,” seeing India’s voice tariffs, which are so low. I hope that service providers might offer voice for free and make money from it in other ways, such as advertising. But no one will consider this because the shareholders still think like telecoms. They think inside the box when the only thing inside the box is a dead body!

Once a Facebook executive in Singapore was asked, “Since Facebook has 800 million users, why not charge them a dollar a month and make $9.6 billion a year? He replied: ‘That’s a telco’s mindset’.”
“Telcos are not good innovators. But they are good at engineering and operating networks. They don’t make apps, but they partner with those who do and layer our superior network and engineering experience, and come up with a better customer experience.

Telcos probably couldn’t execute a Facebook-like model where the experience is subsidized, but can create a local flavor of Facebook or Skype in ways that those companies can’t because Telcos know the local markets better.

One important point to note that:
1) The success of OTT services depends on the level of broadband penetration, which creates a distinction between developed and developing markets.
2) In Nepal, or India or Srilanka or Pak, OTT is not such a threat yet, so traditional voice is still thriving.

Recently KDDI’s mobile phone tied up with OTT player ie., Skype and want to make Skype as default option for voice on KDDI’s mobile phones. COO of KDDI says “Skype has had a big impact on our volumes, but we realized we can’t stop it, so we had to look at how to generate new business with it,”

So I feel still lot of business exist for Telcos, they can still rock provided they start thinking differently.


Alexy said...

And i work on enabling skype on mobiles and set top boxes. That makes me one person definitely interested in seeing skype becoming more popular

Alexy said...

As someone developing skype on multiple platforms, my votes for a skype world. i suppose you would have gone through the VOLTE part too, a pure IP based voice calls is possibile in the near future, hopefully.

Bhavya said...

@Alexy : Good to see ur comment as it brings more value to this post :)
Very true, Huawei will soon be getting ip based voice calls in its high end devices.

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