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Western European Fixed Voice Revenues Could Fall

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Home GENERAL English

Western European Fixed Voice Revenues Could Fall

globaltelconews-admin by globaltelconews-admin
3 March, 2005
in English
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CAMBRIDGE, UK, March 3, 2005 In Western Europe, revenues from fixed voice could fall by as much as one-third (EUR29 billion) over the next five years if 3G operators aggressively target the voice market as a growth area, according to a new report, ‘The Business Case for Carrier Migration to VoIP’, from Analysys, the global advisers on telecoms, IT and media (http://research.analysys.com).

“We expect both fixed-line and 3G operators to offer large bundles of minutes in the attempt to become the sole voice supplier for their customers,” said Margaret Hopkins, the report’s author.

Any move that slows the fall in voice revenues is worth a great deal to incumbent operators, that are facing the prospect of declines of between 6% and 10% per year depending on how aggressively 3G operators target fixed voice substitution.

“If new features made possible by VoIP, including presence-based services and true integration of fixed and mobile services, could reduce the decline in fixed voice revenues from 6% to 4%, then that would be worth EUR23 billion to a large European operator,” said Hopkins.

The report compares the business case for deployment of VoIP as part of a multi-service architecture with those for continuing to maintain the existing PSTN or upgrading the PSTN using current technology. The savings from the former are considerable. (Chart available to journalists on request).

A number of incumbent operators are responding to the changing voice market by optimising their fixed networks for broadband and using VoIP. “Incumbent operators migrating Class 5 central offices to a broadband architecture that supports VoIP can save 11% overall, but this will trigger a recalculation of cost based on interconnect prices by regulators right across Europe,” added Margaret Hopkins.

“BT is the first operator in Europe planning a Class 5 central Office migration to VoIP and this has the potential to bring massive savings of 43% on the opex of the voice network and deployment of broadband, as well as the ability to offer more sophisticated broadband products.”

However, warns Analysys, because regulated interconnect prices are based on the deployment of a ‘modern equivalent asset by an efficient operator’, this could bring down interconnect prices, affecting incumbents right across Europe if the regulators are diligent in applying the principles of LRIC (long-run incremental cost).

Written by Margaret Hopkins, the new report examines the issues involved in, and calculates the cost savings that can be expected from, migration of carrier networks to VoIP, with particular reference to the deployment of integrated broadband and voice networks on existing copper infrastructure by European incumbents.

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