Technology | Media | Telecommunications

Tuesday, September 29, 2015

Over-the-Top Voice App Services will Reach $10 Billion

Most modern smartphones can connect to Wi-Fi routers for broadband internet access. Voice calls placed over that connection, via a software app that converts voice to data, can provide superior quality communication when compared with the cell provider's mobile network.

There are now numerous ways to apply this capability, essentially bypassing the mobile network service provider's traditional offerings. As awareness of these use-cases increase, so does market adoption.

Over the Top (OTT) voice app service providers are expected to see an increase in their revenues by 2020, reaching over $10 billion and representing a five-fold increase over the next 5 years, according to the latest global market study by Juniper Research.

Moreover, their market study uncovered that OTT mobile software application providers -- such as Skype and WhatsApp -- would experience a significant rise in traffic and revenue potential as 4G network roll-outs accelerate, thereby increasing their capability to offer high-quality VoIP (Voice over IP) calls.

The worldwide research found that as most mVoIP capabilities were offered as a free or low-cost service, only a small minority of OTT players had generated a significant revenue from their offerings. That said, these apps are highly disruptive to the mobile network provider business model.


Juniper analysts observed that with traditional mobile network operator voice revenues in sharp decline, often as a direct result of smartphone app adoption, several incumbent mobile operators have tried new business models that copy the capabilities of successful OTT app providers.

These competitive strategies include directly offering functionality such as VoLTE (Voice over LTE) and 'operator approved' Wi-Fi calling through the smartphone.

The research also argued that white label OTT services, such as the Fring Alliance, are becoming increasingly important in an attempt to help legacy mobile operators compete with the OTT business model.

However, Juniper analysts caution that such initiatives historically have poor results -- with both the Telefonica TuMe and O2 TuGo service having been discontinued due to low consumer interest and adoption.

Other key findings from the study include:

  • VoLTE will see widespread adoption among MNOs, with operator billed VoLTE revenues approaching $100 billion by 2020, representing 12 percent of the global operator billed service revenue including voice and data services.
  • HD voice adoption has been steadily rising since 2009, with over 130 operators worldwide offering Mobile HD Voice.