Voice revenues dying under data deluge

NEW DELHI: Over 80 percent of industry executives believe that voice calls will no longer make-up the primary revenue source for telecom carriers within six years.

This is the finding of a global communications survey conducted by the Economist Intelligence Unit on behalf of Oracle.

In fact, over half of the senior executives polled believed this will happen within the next four years, emphasizing the need for operators to immediately identify and develop new revenue streams to avert steep declines in their businesses.

Survey results show that worldwide, executives believe that new on-line voice over IP (VoIP) services, such as those offered by Skype, are the greatest threat to the fixed line revenues with 68 percent of respondents identifying VoIP operators as the primary cause of declining revenues.

Nearly 72 percent of executives believe that introducing new services is the most effective strategy to counter the falling voice revenues, much more so than pricing changes or marketing initiatives. About 65 percent respondents commented on bundled triple-play offerings as important or critical, emphasizing the importance of the overall service packaging within the communications industry.

Interestingly, as many as 51 percent of the executives polled said mergers and acquisitions with mobile operators are strategies they are most likely to pursue in the next two years.

Executives from every region in cited operational cost-efficiency as the main obstacle in developing new revenue streams. Respondents acknowledged that service providers must act now to upgrade their core networks, streamline their organizational structures and business processes and must provide greater functionality and more compelling user experiences, such as converged instant messaging, in-call-content sharing and push-to-talk over cellular networks. Doing this is vital if they are to compete effectively with smaller, highly mobile start-ups leveraging disruptive IP-based technologies and platforms.

"The global communications industry is changing drastically and rapidly," said Denis McCauley, director, global technology research with EIU. "Our survey results illustrate a sense of urgency for fixed-line and wireless service providers to deliver new services for their customers in order to remain competitive."

"The results clearly demonstrate how important it is for both fixed-line and wireless operators to act immediately," said Bhaskar Gorti, senior vice president and general manager, Oracle Communications global business unit. "With the rapid decline in voice revenues and the reality of an ever changing competitive set, customer service providers must accelerate their development of new revenue opportunities."

EIU surveyed 115 telecom industry executives from around the world in September 2006. The survey covered 36 countries in three regions; 38 percent of respondents were based in Europe, 28 percent in North America and 28 percent in the Asia-Pacific region.
Nearly one-third of firms represented in the survey (32 percent) were fixed line or integrated fixed-mobile network operators, with the remainder consisting mainly of mobile operators, equipment manufacturers, software operators and cable operators. The survey sample was also senior—45 percent of respondents were C-level executives such as CEOs, CFOs and CIOs, with the rest consisting of heads of business units and other senior managers.