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Wholesale VoIP Feature Article

Can Telcos Survive as the Demand for Wholesale VoIP Grows?

February 27, 2014
By Susan J. Campbell, TMCnet Contributing Editor

Communications have evolved. For the telco not following the trends and leveraging needed partnerships to enter IP-enabled markets, loss could very well be on the horizon. Wholesale VoIP providers are finding their services in high demand, at least among those who see the future from the realistic point of view.

Like it or not, traditional methods of staying connected are going away. Telcos still clinging to the idea that there’s hope on the horizon are actually slated to lose $386 billion over the next five years. This prediction was recently announced by Ovum (News - Alert) in Melbourne, Australia, and the losses are coming primarily from customers relying on over-the-top (OTT) VoIP solutions such as Microsoft Lync and Skype.

At one time, the demand for international travel and overseas commerce was good news for telcos throughout the world. A large chunk of their revenue came from international calls and roaming. But the transition over the last few years has been away from costly services and focused more on value-added features that get around cost completely.

This prediction means that the OTT market, of course, is thriving. Traffic is expected to grow by a CAGR of 20 percent between 2012 and 2018, hitting 1.7 trillion minutes by 2018. The availability and speed of broadband networks is helping to drive this growth. Other factors include the affordability, growing sophistication and capability of computers, tablets and smartphones. Companies are increasingly turning to VoIP, putting the demand for wholesale VoIP on a steady increase.

For the telco aiming to out-compete OTT players or block services, history shows us it won’t work. Carriers for years tried to stop accessibility to Skype (News - Alert) on mobile devices, only to have the consumer look for a better alternative. Fear of what this service could mean to its revenue stream put the carrier on the defensive instead of looking at the potential for strategic partnerships.

At the time, however, quality was an issue. It was easier for the telco to assume that Skype and other VoIP-based services would be just a fleeting demand, used only by those who didn’t care that the sound was often garbled and latency was a fact of life. But one thing that never changes about technology is its ability to change and improve. These challenges were quickly overcome and now mobile VoIP is in high demand.

In reality, telcos have an opportunity to partner with wholesale VoIP providers to meet this extended need of their client base. While traditional service will be around for a while, the ability to support the full spectrum will produce a better outcome. In doing so, the telco can better build on the value of its brand and the support it has delivered for years. There’s no time to waste, however, as OTT providers aren’t sitting around waiting for telcos to catch up. Without firm action, the predicted revenues will be gone.

Edited by Rory J. Thompson
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