Voice over LTE matters to operators

We have previously blogged about the challenges that LTE still faces, despite the general agreement being that LTE provides a great opportunity for operators. At the same event, the recent LTE Conference in Barcelona, as well as seeing the challenges, we also saw one key theme emerging that can demonstrate just how important LTE is to operators. Namely its role in enabling IMS / VoLTE (IP Multimedia Subsystem / Voice Over LTE).

Let’s break this down a little. Firstly, IMS is enjoying a clear revival, despite reports last year demurring on whether it was being revived or dying a slow death. Operators and vendors are launching IMS by either adapting their existing infrastructure (from the fixed network) or by launching new networks. There are two major drivers behind this:

The rise of VoLTE
Operators are keen to establish a native mobile VoIP solution (i.e. VoLTE) as 2G/3G becomes more and more expensive to operate. Network equipment vendors will increasingly phase out their products, pushing operators to use VoIP solutions. Secondly, VoLTE offers an alternative to the threats posed by OTT (Over the Top) VoIP providers such as Skype. Another way for operators to position themselves as an alternative to Skype and other OTT providers is by bundling voice with data in tariff offers.

Data monetization by partnering with OTT players
IMS is considered by operators to be a good opportunity to offer value to the OTT providers with revenue sharing and data monetization for multiple reasons. With IMS, OTT players would be able to bill the end-user, deliver premium services with QoS capabilities and have an interoperable and standardized application platform. It allows operators to position themselves as the man in the middle to monetize their LTE investment and subscriber management/relationship. By drawing on IMS, operators can go to market faster, grow their market penetration (as well in embedding OTT apps in branded phones), bill end-users, deliver premium services and integrate advanced features delivered by RCS (Rich Communication Services) such as today’s video games that run over voice calls.

Given research claiming that VoLTE service revenues are set to reach $2 billion by 2016, it is clear that there is both demand and the potential for supply, as long as the operators can actually operate.

3 thoughts on “Voice over LTE matters to operators

  1. Kim,

    It will be very hard for the financials and mobile telecoms to convince the users that it is okay to transact over mobile devices. The financial and the mobile telecom industries unfortunately has been plagued with insiders’ data breaches mostly due to the relatively new tech support/customer support outsourcing model.

    I have queried a set of 500 both traditionally early adopters and followers, mixed age ranges and economic status, whether they would adopt the new mobile byteCoin (bitCoin) model. The underlying thread to the results was that of distrust and uncertainty. That is especially since the recent announcements by the players that they would not be insuring the customers’ online transactions.

    It is a pitty nevertheless for many of would love the convenience were it not fot the dire risks.

    ~ Virginia Benedict
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  2. Hi Virginia, many thanks for your comment. I’ve been discussing the subject with my colleague Naomi Lurie who works on the mobile payments team and has offered just a few thoughts to the discussion:

    1. It is true that building consumer trust in the mobile channel will take time, but early adopters are very comfortable with it. A recent study by the Federal Reserve in the US learned that 21 percent of U.S. mobile phone owners were already using mobile banking on a regular basis.
    2. Mobile commerce is growing at a faster rate than eCommerce. For example, eBay did near $2 billion in mobile commerce in 2010, and expects to generate $8 billion in mobile transaction volume in 2012.
    3. Solutions that leverage a secure element (like Mobile NFC) significantly increase the security of transactions.

    It’s certainly a topic we’ll be exploring again here on the Gemalto blog, so many thanks for your contribution. Kind regards, Kim

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