Skip to main content

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."

Popular posts from this blog

Digital Transformation Investment at $3.4 Trillion

Business technology leadership matters. Across the globe, more leaders have been pursuing bold Digital Transformation (DX) initiatives with the goal of creating new sources of business value through digital products, services, and experiences. As an additional benefit, the COVID-19 pandemic revealed that digital transformation efforts improve an organization's resilience against global market disruptions. Global DX investment is forecast to reach $3.4 trillion in 2026 with a five-year compound annual growth rate (CAGR) of 16.3 percent, according to the latest worldwide market study by International Data Corporation (IDC). Digital Transformation Market Development "Despite strong headwinds from global supply chain constraints, soaring inflation, political uncertainty, and an impending recession, investment in digital transformation is expected to remain robust," said Craig Simpson, senior research manager at IDC . The benefits of investing in DX technology -- including aut

Artificial Intelligence for National Border Security

National border protection agencies are under pressure to provide the highest level of security in the face of growing threats, such as increasing illegal migration and international terrorism. Now, government agencies are embracing advanced border security technologies to aid in effectively and reliably securing national borders. These solutions look to detect and identify potential threats and prevent them from escalating to a point that may jeopardize security. Security Surveillance Market Development Traditional border security patrols and Closed-circuit Television (CCTV) surveillance systems aren't adequate protection, and agencies must increasingly deploy new solutions to stay ahead of criminals and other potential threats to ensure the safety of a country’s borders. According to the latest market study by Juniper Research, the value of the border security technology market will exceed $70 billion globally in 2027 -- that's rising from $48 billion in 2022. Growing by 47 p

How to Apply Sustainability to Drive Value Creation

Global climate change policy initiatives have been an emerging topic for CEOs and their leadership teams, as they look to the future. Many organizations are preparing to play their part and help reduce carbon emissions. Eighty-seven percent of business leaders expect to increase their organization’s investment in sustainability over the next two years, according to the latest worldwide market study by Gartner. Customers are the stakeholder group creating pressure for these organizations to invest or act on sustainability issues -- selected by 80 percent of executives, followed by investors (60 percent) and regulators (55 percent). Sustainability Market Development "Sustainability enables businesses to cope with disruption," said Kristin Moyer, VP analyst at Gartner . "Economic uncertainty, geopolitical conflict and escalating materials and energy costs are forcing businesses to reexamine all forms of expenditure." According to Gartner, this focus on essentialism --