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Mobile operators could seize 50% of total voice traffic by 2009 - report
Posted: 16-May-2004 [Source: Analysys]

[Analysys forecasts opportunities for alternative Internet access could could accelerate the decline in fixed voice telephony to 10% a year from 2006 to 2009 and accelerate the migration of voice traffic from fixed to mobile. ]

Cambridge, UK -- While many mobile operators have focused increasingly on non-voice services to enhance their revenue and justify their investment in 3G technology, voice services still account for over 80% of ARPU in most markets. The introduction of 3G, with its cost and capability benefits, together with new tariffs and the convenience benefits of mobile will now allow mobile operators to undertake an aggressive assault on fixed voice services, according to a new report, The Road to Fixed-Mobile Substitution Starts with 3G, from Analysys, the global advisers on telecoms, IT and media (www.analysys.com)

Currently, the vast majority of mobile users in developed markets also retain their fixed voice services. In most markets fewer than 10% of households have a mobile phone but no fixed line. However, different countries vary widely in the extent to which traffic and revenue have migrated to mobile networks. "There are currently huge differences in voice usage levels and ARPU between markets," says report co-author Alastair Brydon. "For example, mobile voice usage ranges from below 120 minutes per month in some Western European countries to seven times this level in the USA. There is a great short-term opportunity for mobile operators to replicate the high voice ARPU and usage achieved elsewhere, without necessarily needing customers to remove their fixed lines." Analysys predicts that the need for fixed lines to support Internet access will limit the decline in fixed voice channels to a total of 1% from 2004 to 2006, but this will not prevent what is likely to be an aggressive battle for voice minutes between fixed and mobile operators.

The new report highlights that the most attractive prospect for mobile operators, but also the most challenging, is to encourage users to relinquish their fixed voice services altogether. "Mobile operators will need to address a number of fundamental issues, such as tariffs, interconnect pricing, network quality, consumer apathy and Internet access," says Alastair Brydon. "For example, many consumers will not consider relinquishing their fixed line unless there is an alternative means of Internet access, whether in the form of DSL unbundled from fixed voice, or broadband wireless access using one of the emerging high-speed wireless technolgies."

However, Analysys forecasts that the availability of alternative Internet solutions could accelerate the decline in fixed voice channels to almost 10% a year from 2006 to 2009, further accelerating the migration of voice traffic from fixed to mobile. Over the next five years, the total volume of voice calls in Western Europe will increase by 10%, while the volume of calls by mobile phones will increase by 94%, resulting in 50% of voice call minutes being generated by mobile phones in 2009.

The report shows that 3G will be a key enabler to fixed-mobile substitution, bringing a potential step-change in capacity, quality and cost per minute. "The introduction of 3G potentially provides a network cost per minute one fifth that of GSM," says Mark Heath. "However, 3G roll-out must deliver the necessary wide-area and in-building coverage to support a fixed-substitution strategy."

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