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

The Telco Innovation Toolbox: Economic Models for Managing Disruption and Reinventing the Telco

The paper introduces novel economic thinking that is the result of over 2 years of research of ecosystem economics and telco disruption from VisionMobile in association with Ericsson.

The paper introduces ten economics and strategy frameworks that will help operators to accelerate their “digital” strategies, make the right innovation investments and avoid costly mistakes.


The topic of telco disruption brought upon by over-the-top (OTT) players is high on telecom industry agenda. However few realize that telcos are being disrupted because the basis of competition in mobile has fundamentally changed. It has changed from “reliability and scale of networks” to “choice and flexibility of services”, driven by the transition from “mobile telephony” to “mobile computing”.

The change is fundamental and irreversible.

The telecom industry is facing a conundrum today: providing undifferentiated voice, text and data services to smartphone users leads to a competition on price and diminishing margins. At the same time, staying in business requires that telcos keep up with ever-growing demand for data and continued investments in building wireless capacity. Investments in networks are still necessary, but they alone are no longer sufficient for profitable growth. What’s next?

Harvard Business School professor Clayton Christensen recently said: “I think, as a general rule, most of us are in markets that are booming. They are not in decline. Even the newspaper business is in a growth industry. It’s not in decline. It’s just their way of thinking about the industry that is in decline.”

The telecom industry too can greatly benefit from looking at familiar challenges from a new perspective. Telecom is a booming industry with ever-growing demand for mobile data and a rising number of subscribers. But the basis of competition in mobile has changed putting pressure on legacy business models. Building networks alone can no longer guarantee profitable growth for telecom operators. Competing head-on with asymmetric business models of OTT players won’t help either. Instead, seizing the full potential of this booming industry means leveraging mobile digital ecosystems to create meaningful differentiation, lock-in for core telco services and incremental revenues. This requires an understanding of ecosystem economics, development of new organisational capabilities and resetting the KPIs for “digital” initiatives.

The Telco Innovation Toolbox introduces ten important economic models and strategy frameworks that will help operators to make the right choices in their innovation investments and accelerate their efforts to reinvent telco business. We describe ecosystem economics in the context of telco business in chapters 1 to 4, discuss the impact of traditional financial tools and the need for new innovation processes and KPI in chapters 5 and 6, and finally suggest how to leverage ecosystems to the benefit of the telco business in chapters 7 to 10.

Download Report: http://www.visionmobile.com/product/telco-innovation-toolbox-report/

Source: http://www.visionmobile.com/blog/2012/12/surviving-disruption-an-innovation-toolbox-for-reinventing-the-telco/

LTE Strategies (Presentation Informa TM)

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VoIP and IP Messaging (Report Informa T&M)

VoIP and IP messaging: Operator strategies to combat the threat from OTT players

Blogger notes: This is an overview of a complete report from Informa Telecoms and Media but it's useful for defining if you need to buy it
 
One of the key attractions for consumers with regards to mobile VoIP and IP messaging applications is the misconception that they enable ‘free’ voice and/or messaging among their community of users; mobile users will still need to purchase a smart-phone and a mobile data plan in order to use the services.

That the services are ‘free’ however, is not the mobile operators’ only problem. Consumers currently use OTT services because they are free, but the risk for mobile operators is that in the future, consumers use OTT services because they are better than the operators’ own services – eventually rendering the mobile operator invisible.

Today’s OTT players are only having a small impact on mobile operators’ voice and messaging revenues, because the relative user base is small. But as the penetration of smart-phones and mobile broadband grows, so too will the penetration of the services provided by the OTT companies, potentially resulting in a corresponding decline in operators’ voice and messaging traffic.

Mobile operators are pursuing five key strategies in order to protect their revenues from voice and messaging: do nothing, fight, neutralize, partner or emulate. Only three of these strategies are future-proof, according to Informa’s research.

This report provides a detailed analysis of the OTT IP communications market, including an evaluation of the threat that OTT IP communications represents to mobile operators, market enablers and inhibitors, operators’ strategies for OTT communications and the outlook for OTT IP-based messaging for operators and OTT providers. The report also features seven case studies on OTT IP or messaging communications providers, including Viber Media and WhatsApp.

To view a free extract of this report: http://mail.informatm.com/files/amf_informa_plc/project_1150/Mobile_VoIP_and_IP_Messaging_new_extract_-_9th_Feb_2012.pdf

Source: https://commerce.informatm.com/reports/main/messaging-over-ip.html

LTE Opportunities and Challenges in Asia - 2013

LTE global growth is forecasted to be led by Asia Pacific with India and China as major drivers. In this whitepaper, a snapshot of the likely changes Long Term Evolution will bring to Asia wireless communication operators and the mobile internet service providers. It compares the differences between LTE and WiMAX, as well as outlook of the LTE network adoption worldwide via the growth of 3G subscriber base from now, until 2013.

Other key takeaways included in this whitepaper are forecasts of 3G subscribers by region, worldwide LTE adoption data, mobile usage behaviour of several Asian countries, as well as the key challenges and opportunities of LTE adoption.

Source: http://4g-portal.com/4g-business-readiness-lte-opportunities-and-challenges-in-asia-whitepaper
 

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/