Uncommon Wisdom

Feb 18 2011   3:05PM GMT

VoLTE migration faces regulatory and revenue questions

Tom Nolle Tom Nolle Profile: Tom Nolle

In the telco space, Mobile World Congress seemed to bring out support for VoLTE; both AT&T and Verizon indicated they’d be making the Big Move, though over a period of two to three years. There are still open questions on how LTE networks will support voice, how they’ll support roaming and premium services, and how much or little IMS and more traditional interconnect concepts will drive the process. But presuming that the migration happens on schedule and that operators continue to push hard with phones, it’s not unreasonable to think that by 2015 we’d be seeing some pressure on wireline voice. Will this create that final push to fixed mobile convergence (FMC) and IP infrastructure everywhere?

Sure, but probably not all that quickly. The problem is that the great majority of households retain PSTN voice services. Operators tell me that they don’t believe they will reach 80% penetration of LTE handsets before 2016 or even later in some areas. They believe that regulators would be distressed by plans to force upgrades either in wireline or wireless unless the operator could essentially create the PSTN at the home dmarc and sustain compatibility with current in-home and in-business phones. They’re worried about lifeline, about powering phones, and about 911 services. But most of all, they’re of the view that recapitalizing voice services when voice ARPU has nowhere to go but down is a bad move.  So they aren’t in a rush to change their strategy for wireline.

What VoLTE shows is that the migration to VoIP and the resulting changes in infrastructure are most likely to come about because of some business initiative that creates new revenue. Transformation is a proactive process, driven by opportunities to make money or requirements to make it on something different. Because LTE is 4G, 4G is the future of wireless broadband and wireless broadband is the future of mobile, operators are moving to VoLTE.  The “future” in all these cases is seen as being revenue-positive. It remains to be seen how fast IP voice will penetrate the rest of the TDM world.

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