Report: Skype makes up one-third of all international phone traffic

Microsoft's Skype unit grew its international traffic by 44 percent in 2012, more than twice the volume growth achieved by all the phone companies in the world combined, according to a report from TeleGeography. The report found that global Skype usage is now equivalent to over one-third of all international phone traffic, Skype's highest level ever.

The report, which looks at trends in the international long distance market, highlights the growth of Skype and other over-the-top communication service providers. TeleGeography found that that "international telephone traffic grew 5 percent in 2012, to 490 billion minutes," while at the same time "cross-border Skype-to-Skype voice and video traffic grew 44 percent in 2012, to 167 billion minutes. This increase of nearly 51 billion minutes is more than twice that achieved by all international carriers in the world, combined." That means Skype traffic represented 34 percent of all international phone traffic last year, the firm said.




The above shows international call volumes and growth rates, 1992-2012, according to TeleGeography. The firm said data for 2012 are projections based on preliminary data. VoIP traffic reflects international traffic transported as VoIP by carriers, and excludes PC-to-PC traffic.

"The pressure on carriers will continue to mount in the coming years," TeleGeography analyst Stephan Beckert said in a statement. "While Skype is the best-known voice application, it's far from the only challenger to the PSTN. Google (Talk and Voice), WeChat (Weixin), Viber, Nimbuzz, Line, and KakaoTalk have also become popular. And, perhaps most ominously for telcos, Facebook recently added a free voice calling feature to its Messenger application."

However, TeleGeography noted that not all of Skype's traffic represents a loss for traditional carriers, since over 40 percent of Skype's traffic is now video, "and it's likely that a meaningful share of this is 'new' traffic, rather than a direct replacement for a telephone call. However, given their enormous traffic volume, it's difficult not to conclude that at least some of Skype's growth is coming at the expense of traditional carriers."

TeleGeography found that if all of Skype's on-net traffic had been routed via traditional telcos, global international telephone traffic would have increased 14 percent in 2011 and 13 percent in 2012, rather than the 5 percent the market experienced in 2012.
In other Skype news, the company has started testing video messaging for iOS, Android, and Mac devices. The new video feature lets Skype users send up to three minutes of video to each other.

A Skype spokesperson said that the company's video messaging "is in early release for testing in several markets for Android, iOS, and Mac with functionality to send and receive video messages. Users in these markets across all Windows desktop and mobile platforms can receive messages, too. We will have send capability in Windows by end of April. In the meantime, we continue to test this new feature in its early release."

Direct download: http://www.telegeography.com/page_attachments/products/website/research-services/telegeography-report-database/0003/6770/TG_executive_summary.pdf

Source: http://www.fiercewireless.com/story/report-skype-makes-one-third-all-international-phone-traffic/2013-02-15
 

Improved traffic distribution indicates that operators are managing assets more effectively

There are likely to be a few last-minute adjustments to slides before this year’s Mobile World Congress, given that the industry’s most popular traffic forecasts were downgraded. Last week, Cisco released its latest mobile data forecasts, which show a significant decline from previous estimates. The company has lowered its figures by more than 30 per cent in the period 2012-2016 compared with their figures published this time last year.

February 2013: http://www.cisco.com/en/US/solutions/collateral/ns341/ns525/ns537/ns705/ns827/white_paper_c11-520862.html
February 2012: http://www.puremobile.com/media/infortis/documents/cisco_mobile_forecast.pdf

Some of the main reasons cited for the downgrade include

• The implementation of tiered mobile data packages.
• A slowdown in the number of mobile-connected laptop net additions.
• An increase in the amount of mobile traffic offloaded to the fixed network. Cisco says that about 33 per cent of mobile traffic was offloaded to the fixed network in 2012.
• Higher-than-expected tablet usage on wifi.

Although it is encouraging to see that Cisco has now brought its forecasts more into line with those of most other commentators, no one should be surprised to see further reductions as many of the points highlighted above bite down on future cellular usage.

Looking beyond the downgrade of its forecasts, another conclusion from the company’s research could bring much more positive news for the industry. Cisco has found that mobile data usage is becoming more evenly distributed among users. In 2010, the top one per cent of users generated 50 per cent of traffic; in 2012, the proportion dropped to 16 per cent, below the fixed-traffic ratio of 1:20 that has been evident for years.

Because of the dynamics of a growing market, this flattening of usage distribution was inevitable as we move to mass-market adoption; but the speed and scale at which it has occurred (according to Cisco) is surprising and just goes to show how fast the industry moves.
We can hypothesize a number of factors that have contributed to this change, including:

• Targeting of extreme usage by operators through yield-management strategies such as fair-usage policies, data caps and throttling.
• The increasing availability of free wifi acting as a substitute for cellular usage.
• The natural limit of consumption of high-bandwidth data on cellular. This is something that we have been saying for a long time at Informa. Essentially, high-bandwidth applications, such as video, are more suited to stationary, indoor consumption, which is not the natural sweet spot for cellular.
• The huge increase in the number of smartphone users attracted by affordable handsets and data plans

So why is this encouraging? Well, operators need to manage their core asset and scarce resource, namely bandwidth, as efficiently as possible. For years we’ve heard complaints about the “data hogs” that consume disproportionately large amounts of bandwidth for relatively low ARPU, but now it would seem that operators have been able to significantly modify usage to broaden the consumption on their networks. However, this is just part of the equation. Investors don’t care about traffic distribution: They want to see evidence that this traffic management translates into greater value.

The current reporting season has been littered with CEOs confirming that their traditional revenue streams of voice and SMS continue to fall against the relentless onslaught of free internet-communication services. Swisscom’s CEO believes that the company’s voice and SMS revenue will be gone within three years. If we strip away these declining revenue streams, we’re left with the future of an operator’s business, namely internet/data connectivity. To derive incremental value from this source, operators must therefore be able to differentiate the “data” they provide, a topic further explored in a recent Informa white paper, Understanding today’s smartphone user. We are indeed seeing evidence of progress in this area, and if you listen carefully, there are even murmurs that yield-management strategies are beginning to benefit bottom lines. For example, AT&T’s 4Q12 results show that the company now has “two thirds of smartphone subscribers on usage-based plans” (as opposed to all-you-can eat data plans) and cite take-up of these plans as a major contributor to increasing year-on-year wireless EBITDA by seven per cent.

It’s clear that it has never been more critical for operators to demonstrate that they can monetize their bandwidth, and although it’s taken a while, perhaps we’re now just starting to see real evidence of a more sustainable approach to network management and pricing in mobile. Cisco might have recently adjusted its view of the market but, thankfully, it would seem that operators have started to as well.

Source:  http://www.telecoms.com/96532/improved-traffic-distribution-indicates-that-operators-are-managing-assets-more-effectively/?utm_source=rss&utm_medium=rss&utm_campaign=improved-traffic-distribution-indicates-that-operators-are-managing-assets-more-effectively

Mobile operators should slow down rollout of VoLTE

Ovum analyst Jeremy Green is advising mobile operators to slow down on the rollout of mobile VoIP over 4G LTE networks because there are still service and supply issues to work out, and no compelling services or revenue opportunities.

Green advised operators to focus on data services over their high-speed wireless networks in the short term. In the long term, VoLTE will provide network efficiency and costs savings, he added.

"While there are some questions about how to provide voice services during the interim period when the LTE network sits alongside legacy 3G and even 2G networks, there is general agreement that the ultimate destination is a solution based on the IP multimedia subsystem, which is now designated as VoLTE--'voice over LTE'," Green wrote.

Service parity issues, such as support for emergency calls and in-call handover between LTE and other networks, are holding operators back from deploying VoLTE. There is also an insufficient number of devices out there that support VoLTE and problems with device performance, such as battery drain.

"The service benefits of VoLTE also appear to be tenuous," Green wrote. "Even if RCS services were a sure-fire winner (and this is by no means an established certainty), their deployment is largely unrelated to LTE, as the few commercial deployments to date largely demonstrate. It is a similar situation with HD voice, which can be deployed on both LTE and non-LTE networks," he explained.

At the same time, factors that are driving operators toward early VoLTE deployment include network and spectrum efficiencies, eliminating the need for a separate voice network, improving call setup times and the offering new services, such as high-definition voice, simultaneous data usage and rich communication suite services.

Green advised operators to stay engaged with VoLTE, but not to rush into deployment. In the case of VoLTE, the early bird does not catch the worm, he added.

For more: http://ovum.com/2013/01/10/theres-no-harm-in-taking-a-slow-road-to-volte-deployment/

Source: http://www.fiercemobileit.com/story/ovum-mobile-operators-should-slow-down-rollout-volte/2013-01-11

Mobile broadband presents the largest opportunity for operator revenue growth

Global telecom operator revenues exceeded US$2tn in 2012, with 60 percent going to mobile operators, finds Ovum. While overall revenue growth is expected to be minimal, Ovum believes some segments will still have above-average growth and significant incremental revenues over the next five years at each level of the value chain.

In a new report*, the global analysts reveal that mobile broadband presents the single largest opportunity for telcos to claw back revenue, as forecasts show mobile broadband growing 19.2 percent annually and generating US$122.9bn in incremental revenue between 2013 and 2016. Other segments with double-digit revenue growth over the next five years include public cloud, enterprise Ethernet, IPTV, and managed/hosted IP voice.

"The recovery from the 2009 recession has been weak, and the ongoing global fiscal crisis continues to present a risk to the telecom industry," comments John Lively, chief forecaster at Ovum. "Over the next 3–4 years, both fixed and mobile operators will face the same fundamental challenge: to increase new sources of revenue fast enough to offset the decline in mature services."

In the consumer segment this will involve competing with new over-the-top players as well as traditional competitors. To meet this challenge, Ovum recommends adopting consumer-services marketing approaches.

For infrastructure vendors, increases in overall capital expenditures will be limited by low single-digit gains in service provider revenues. To grow revenues faster than the industry average, Ovum recommends that vendors position themselves in one or more high-potential product segments, such as converged packet optical, ROADMs, 40G/100G networking gear, carrier Wi-Fi, and network-related services.

Elsewhere, Ovum warns component makers to expect continued high volatility in market demand – higher highs and lower lows than their customers or end customers are experiencing. "This can be mitigated to some degree by forming close relationships with infrastructure vendors and jointly understanding the end customers' needs and plans," suggests Lively.

Source: http://www.fiercewireless.com/europe/press-releases/ovum-reveals-mobile-broadband-presents-largest-opportunity-operator-revenue

2013 Telecoms Predictions (Ericsson Lab)

Ericsson ConsumerLab has identified some of the most important consumer trends for the coming year. As 2012 draws to a close, Ericsson ConsumerLab has identified the hottest consumer trends for 2013 and beyond.

 

Here are the 10 hottest consumer trends:

1. Cloud reliance reshapes device needs. More than 50 percent of tablet users and well above 40 percent of smartphone users in USA, Japan, Australia and Sweden appreciate the improved simplicity of having the same apps and data seamlessly available through the cloud on multiple devices.

2. Computing for a scattered mind. From desktops, files and folders to flat surfaces, apps and cloud services, consumers are increasingly turning their backs on a computing paradigm for the focused mind. Tasks are handled at the spur of the moment - as we stand in a shopping line or talk to someone at a café. Purchase intent is higher for tablets compared to desktop PCs, and for smartphones compared to laptops.

3. Bring your own broadband to work. A total of 57 percent of smartphone users use their personal smartphone subscriptions at work. Personal smartphones are increasingly being used for work, to send emails, plan business trips, find locations and more.

4. City-dwellers go relentlessly mobile. By relentlessly accessing the internet always and everywhere, consumers are now an unstoppable force making internet truly mobile. Total smartphone subscriptions will reach 3.3 billion by 2018 and mobile network coverage is one of the most important drivers of satisfaction for city life.

5. Personal social security networks. As a result of economic turbulence, trust in traditional structures and authorities is decreasing and consumers increasingly trust their personal communities. Personal networks online serve as a safety net and social media is shaping up to be a serious contender to the traditional job agency.

6. Women drive the smartphone market. New figures clearly show that women drive mass-market smartphone adoption. No less than 97 percent of female smartphone owners use SMS. A total of 77 percent send and receive photos, 59 percent use social networking, 24 percent check in at locations and 17 percent redeem coupons. The figures for men are lower in these areas.

7. Cities become hubs for social creativity. City center dwellers have significantly more friends online than people in suburban areas. 12 percent of people that live in cities say that the main reason for using social networks is to connect and exchange ideas with others, making it the third most common reason for social networking after staying up-to-date with friends and keeping them updated.

8. In-line shopping. A total of 32 percent of smartphone users already shop with smartphones; they now start to combine in-store and online shopping aspects. They want to see products, get information and make price comparisons, and make purchases immediately without having to que up at the cash register.

9. TV goes social. A total of 62 percent of viewers use social forums while watching video and TV - and 42 percent of  those who use social forums or chats while watching discuss things they currently watch on a weekly basis. Over 30 percent are more likely to pay for content watched in social contexts. The majority of video and TV consumption on mobile devices takes place in the home.

10. Learning in transformation. Learning is transformed through both internal and external forces: Young people bring their personal technology experience into the classroom, driving a bottom-up pressure for change. Simultaneously governments and institutions look for new ICT solutions in order to be more efficient. Connectivity changes the outlook for children on a global scale. In India, around 30 million of 69 million urban children aged 9 to 18 own mobile phones.

Link to "10 hot consumer trends for 2013" report: http://www.ericsson.com/res/docs/2012/consumerlab/10-hot-consumer-trends-2013.pdf

Link to infographics: www.ericsson.com/res/docs/2012/consumerlab/10-hot-consumer-trends-2013-infographic.pdf

Source: http://www.ericsson.com/news/1664391

2013 Telecoms Predictions (Informa T&M)

Analyst group Informa Telecoms & Media has revealed its Top Ten trends for 2013 for the telecoms and media sectors. Five of the predictions relate directly to telecoms operators and the other five cover the TV, digital media and OTT communications sector.

“We reckon that 2013 is going to be another tough year for the telecoms industry with a continued emphasis on cost control,” said Mark Newman, Chief Research Officer at Informa. “For operators, the migration to a data-centric business and revenue model will continue apace. And we see risks for those operators that do not invest properly in building wide-area networks that can deliver high-quality data services”.
“When it comes to new services, there will be a continued usage migration to smartphones and tablets. But both established and new players are trying to figure out how best to monetize mobile usage. Don’t be surprised to see some of the disruptors being disrupted by new technologies and business models in 2013”.

1. Wifi will become a victim of its own success
There will be a shift in operator sentiment away from public wifi as it becomes evident that the growing availability of free-to-end-user wifi devalues the mobile-broadband business model. Mobile operators will respond by articulating the value of their cellular networks better, but others not affected by this trend will double down on their public wifi investments to continue to propel the deployment and monetization of wifi.

2. Facebook goes all in on mobile
Facebook is having a tough time translating its popularity on mobile devices into revenues. Although its most recent financial results at last showed some improvement in mobile advertising revenues, we do not believe that this alone will be enough to sustain and grow its mobile business. There are three new monetization strategies currently available to Facebook: 1) develop new premium services to sell to its existing customers; 2) take a share of revenues from third-party content providers that develop services on its platform; or 3) expand into the device or device software business. We believe that the first two are Facebook’s preferred options and that billing and marketing / distribution relationships with operators, particularly in emerging markets, could bring tangible benefits. With regards to the devices business, we expect Facebook to emerge as a strong backer of the new Mozilla mobile operating system which is expected to challenge Android in the low-cost smartphone device sector.

3. What’s up with WhatsApp
The hype bubble around WhatsApp and other OTT messaging services will continue to expand in 2013, especially driven by frequent acquisition rumors, but the emergence of early anecdotal evidence that some consumer segments are starting to migrate their attention and usage to alternative services, both old and new, will start to dampen expectations and highlight the fickle and fragmented nature of consumer behavior.

4. Digital services: Show us the money
Investors will demand a clear path to revenue from investments into digital services before operators begin to feel any share-price benefit from initiatives. PR-friendly they may be, but demands and expectations from shareholders will grow that they are also friendly to the bottom line. It will become apparent to many operators that material revenue streams that can shift the dial of group-level revenues will be very hard to come by.

5. Content providers continue to spend on infrastructure
Google, Netflix et al will continue to invest heavily in extending their infrastructure closer to users in 2013. Informa recommends that operators consider these proposals carefully and recognize where they are likely to gain more from reduced costs and increased network efficiency than lose out in terms of uncertain revenues from so-called two-sided business models.

6.Subsidies under the microscope, but not necessarily for the right reason
Handset-financing models established themselves in Europe in 2012 and will continue to spread globally in 2013. But a reduction in subsidies and changes to traditional ways of retailing devices will come at a cost to operators. Physical and online retailers, such as Amazon, as well as device-platform owners, such as Apple or Google, will accelerate their own initiatives to disrupt traditional device distribution models. Every slip in the share of devices sold through operator channels will serve to further erode the balance of power between operators and internet and platform owners at the negotiating table.

7. Shared network, shared pain?
The logic of network-sharing will increasingly be questioned by the industry given the core strategic importance of a differentiated network platform. In Europe, especially, we expect more operators to forsake dividends and free cash-flow in order to ramp up investments into network infrastructure in the hope of establishing a competitive advantage built upon network quality of experience. However, despite this reversal of attitude by some, network-sharing and operator consolidation will sweep through emerging markets, especially in Africa.

8. Voice over LTE: Only fools rush in
Boosted by a lack of any negative customer feedback about interim voice for LTE solutions (such as falling back to circuit-switched 2G and 3G networks), more operators will join Verizon Wireless and EE in pushing out their timelines for the commercial deployment of VoLTE. A business case that looks to be based solely on spectrum efficiency will struggle to gain enough executive support to justify a rushed investment plan.

9. APIs: The new currency of the digital economy
APIs will become the leading currency of the digital economy – speeding service activation, configuration, customer experience management and time to revenue. Whether directly monetized or not, APIs are the new “interconnect standard” among digital service stakeholders.

10. Netflix will have a breakout TV hit in 2013
In 2012, a previously niche channel player, AMC, owned the most popular show on US TV – “Breaking Bad”. In 2013, it will be the turn of an OTT provider to break through – perhaps with “House of Cards”. Pay-TV operators should respond by looking at how they might partner with Netflix, rather than seeing it only as a threat.

Source: http://www.telecoms.com/57911/top-10-trends-for-2013/

2012 LTE Market Trends

Recently IDATE presented a study regarding LTE Market Trends/ Forecasts and Strategy.

Here is the link: IDATE - LTE 2012 MARKET TRENDS

2013 Telecoms Predictions (Analysys Mason)

In 2013, roll-out of LTE services will have limited immediate economic impact, social media giants look set to stir up IP-based messaging services and smartphone penetration growth rates will slow considerably, according to Analysys Mason’s top telecoms predictions for the next 12 months. The company also predicts that Apple will continue to lose market share in the tablet space and the VoLTE investment case will come into the spotlight for operators.
 
1. LTE arrives, but with limited immediate impact: in 2013 LTE will become a commercial reality in many more countries, but will have limited economic impact in the next 12 months. Some European countries and emerging markets in Latin America are set to launch the network, as well as countries in South-East Asia via the Asia–Pacific band plan. Some developed markets such as South Korea will also start to deploy LTE-A and take advantage of features such as carrier aggregation to craft larger channels for higher-speed services.
However, the immediate economic impact of LTE will be limited in countries where it has been priced as a premium product and the economy remains sluggish (e.g. Italy and Spain). The industry will also realise that consumers are unwilling to pay a premium for LTE mobile broadband, and that this service will not compete with next-generation fixed access on anything other than a complementary basis. The effect will be to push down the price of 3G/HSPA mobile broadband services.

2. The ‘big switch-off’ will accelerate: 2013 will see growing operator focus on ‘the big switch-off’ – legacy mobile infrastructure for mobile network operators, copper networks and PSTN for fixed operators. Approaches to this will be varied. One operator in South Korea, for example, has already switched off its 2G network.

3. Social media giants to further shake up IP-based messaging: in 2012, operators responded to SMS cannibalisation by launching RCS-e, which was followed by a number of ‘telco-OTT’ services. In the next 12 months, competition will heat up further as social media giants such as Facebook move in. Analysys Mason forecasts that European operator revenue from messaging will decline by 34% in the next four years, from EUR28 billion in 2011 to EUR18.6 billion in 2017.

4. VoLTE investment case to come into the spotlight: the first voice-over-LTE (VoLTE) services came to market in 2012. Though widespread commercial deployments are still some way off, operators will need to make some tough decisions about the future of their voice services. Potential cost savings are currently driving the IMS investment case, but revenue implications are uncertain, and a clear vision for how voice services should evolve in an LTE world has yet to be articulated. HTML5/WebRTC will further stimulate the debate about whether ‘voice is just an application’.

5. Smartphone penetration growth rate to slow markedly: the smartphone market will continue to grow but the rate at which it grows will be markedly slower than in previous years. The number of annual global smartphone shipments will grow from 691 million in 2012 to 869 million in 2013. However, the rate of growth in the rate of new smartphone connections will significantly decline: from 39% in 2011 to 29% in 2012. In 2013, this growth rate will decline further to 20%.
Analysys Mason predicts continued, incremental development of the smartphone OS market share situation. Both Android and iOS are predicted to marginally grow their share of smartphone sales in the next 12 months globally (from 56.4% to 58.1% and 21.5% to 22% respectively). However, Symbian’s market share for sales will fall from 5.9% to 2.7%, reaching zero in 2016.

6. Apple to fall below 50% market share for tablet sales: as the tablet market continues to grow, Apple’s dominance of it will continue to decline, faster than many expect. Apple will fall below 50% market share for tablets by the end of 2013, with the iPad mini expected to have only a limited impact on sales numbers due to its high price point (USD329 versus less than USD200 for a Kindle Fire HD). Both Apple and Samsung lost market share in 2011-12 to the benefit of other vendors such as HTC, Motorola, RIM and Sony.
Content ecosystems for tablets will be a key "differentiator" in 2013 and as important a feature for tablets as the quality and size of the screen or processing power. Vendors who focus on expanding their content line-up and international footprint will be most likely to capture non-Apple tablet users.

7. Multi-device subscription pricing to emerge: selling prices for smartphones and tablets have been falling in the past five years; the average price of a smartphone has declined by EUR300 since 2007. This trend has supported increasing data penetration and the emergence of the multi-device user segment, which will result in many more operators launching multi-device subscription plans to capture additional revenue. This is particularly true for LTE subscriptions where per-gigabyte pricing covers a wide range of USD14–85 per gigabyte.

8. Traditional TV under more pressure: OTT/Connected TV and non-linear TV will continue to force broadcasters/pay-TV and telecoms operators to re-think their strategies. The take-up of paid-for OTT video services to the TV in the USA and Canada will more than double to 53.1 million households between 2012 and 2017, representing 37.4% of households.
The take-up of paid-for OTT video services in Europe will reach an estimated 2.3 million households in 2012, representing a mere 0.7% of households. We expect this to increase to 32.2 million, or 10% of households, in 2017. Compared with the USA and Canada, growth in Europe will continue to be constrained by a lower propensity to pay for video services, because of the widespread availability of high-quality free content from public broadcasters.

9. Wi-Fi to the rescue: small-cell/service-provider Wi-Fi solutions will address mobile operators’ needs for dense urban wireless coverage and capacity, but limited backhaul availability, standards maturity and solution costs will blunt major deployments until late 2013 or early 2014. LTE 2600 will emerge as a key option for small-cell spectrum gaining network and device support to address capacity needs of developed-market operators, complemented by growing 5GHz Wi-Fi providing improved Wi-Fi performance.
Service-provider Wi-Fi solutions based on HotSpot 2.0 and devices supporting Passpoint 2.0 will come to market in late 2013, helping to bridge the chasm between cellular networks and the emerging ‘carrier grade’ Wi-Fi service. Operators will also start to look at providing various grades of service: cellular, SP Wi-Fi and ‘Best Effort’ Wi-Fi to help differentiate their service and brand as well as support "monetisation" of the wireless experience.

10. Operators in emerging markets come of age: process transformation, opex and network cost optimization will become major issues in emerging markets as operators within these regions are coming of age and an apparently endless growth in mobile penetration rates is finally slowing down.
The penetration rates of active SIMs in some African and Middle Eastern countries, for example, already exceed 100% of the population (eg. South Africa, Saudi Arabia, Morocco, and the United Arab Emirates).

Source: http://4g-portal.com/2013-telecoms-predictions-from-analysys-mason