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How Over-the-Top VoIP Disrupted Legacy Telephony

While over-the-top (OTT) voice-over-IP (VoIP) services are not about to totally replace traditional telephony, they will have a significant impact on telecom service provider revenues over the next eight years, according to the latest market study by Ovum.

Forecasts reveal that OTT VoIP will cost the global telecoms industry $479 billion in lost cumulative revenues by 2020 -- which represents 6.9 percent of cumulative total voice revenues.

New research provides some reassurance to network operators that are fearful of the demise of legacy telephony. It suggests that although revenues continue to fall, voice traffic is shifting -- rather than collapsing.

Carefully targeted price increases are expected to be commonplace as operators try to maintain their revenues. Yet, Ovum believes that a focus on creating cloud-oriented telephony apps, and efforts to maintain the relevance of telephone numbers will ensure that operators have a place in the future communications landscape.

"Where operators have seen voice telephony as a service without a future, they have chosen to compete on price in an effort to eke out any remaining revenues from the market," says Jeremy Green, principal telecoms strategy analyst at Ovum.

However, taking such a pessimistic view obscures some of the important opportunities in the voice telephony market. That being said, it also raises questions about why service providers have been so slow to innovate, creating new value-added features -- in anticipation of the emerging requirements.

The complete collapse of telephony revenues is not likely, according to Ovum, but the long-term trend is towards a richer and more complex communications environment in which voice serves a different function and telephony plays a much smaller role.

Ovum believes that people have been influenced by their experiences with OTT services, and now expect traditional network operators to provide content, relationships, and history within a service, irrespective of device or access method.

As such, Ovum recommends that network operators develop or deploy applications that link cloud services with telephony usage -- this is clearly an obvious next step, not really an innovation.

Ovum also sees the continued existence of the telephone number as a key asset for telcos as it is central to their relationships with their customers.

"The major threat posed by OTT VoIP is that it weakens customers’ attachment to their telephone number and transfers their attachment to a new address. This may turn out to be a more significant factor than the direct impact on telephony revenues," explains Green.

"Operators should use telephone numbers as the identifier and address for cloud-based services, allow customers to choose numbers that are relevant to them, and develop more application-to-person SMS applications."

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