By Yang Qin
Voice is still the bread & butter of mobile telco, but revenues have been stagnant in the OTT era. VoLTE, through its superior user experience and spectrum utilization, presents the opportunity for more bread and more butter through reduced spectrum CAPEX, increased voice revenue, more customers, and more enterprise services.
Value of voice in the LTE era
Long-term evolution (LTE) is a data-oriented technology, but it still offers a chance to breathe new life into the voice revenue stream, which has declined to 58% of the mobile carrier total globally – a significant drop. Korean carriers KT, SKT, and LG+ offer a certain amount of voice in bundled service packages, while Japan's NTT DOCOMO offers separate voice and data service packages for users to combine freely, with unlimited on-net calls. In the U.S., Verizon offers a bundle of limitless voice service and a certain amount of data, but the price is high. And in Britain, EE also offers a bundle of limitless voice service and a certain amount of data; but compared to its data-only package, the voice package contributes a significant portion of revenue; its loss would be devastating.
Four business benefits of VoLTE
LTE voice was once a diverse field, with voice over LTE (VoLTE), simultaneous voice and LTE (SVLTE), circuit-switched fallback (CSFB), and voice over long-gain antenna (VoLGA) all vying for supremacy, but IP-multimedia subsystem-based (IMS-based) VoLTE has now emerged as the long-term solution of choice, with the others only proving temporary.
VoLTE has distinct advantages in terms of user experience and spectrum utilization. Calls connect ten times faster, while four times as many users can occupy a given area without compromise of their call experience, and MOS score averages remain above 4.0. However, VoLTE isn't just about technology. Telco CFOs will consider how it influences consumption behavior, its effects on operational efficiency, and how business value can be created.
Reduced spectrum CAPEX
LTE competition in any country starts with the spectrum auction. Spectrum is precious, and will remain so as LTE data traffic continues to surge. According to the GSMA, 62MHz of LTE700 spectrum was auctioned in the U.S. for USD19 billion, while 2×30MHz bands of LTE800 frequency sold in Germany for EUR4 billion.
The use and reuse of current spectrum is far more economical than buying more. By utilizing what was once 2G/3G spectrum for LTE, data and voice services can be migrated gradually, saving billions in telco CAPEX. This can also free up certain spectra for LTE, such as 800MHz or 1800MHz, that are widely used for LTE roaming.
Keeping telcos relevant
OTT players are eroding telco revenue, but VoLTE and rich communication suite (RCS) services are opportunities to regain lost ground. They provide similar services to those offered by OTTs, including chat, group chat, and picture/video/address sharing, enhanced by carrier-grade service quality & security and differentiated services such as global connection and QoS guarantee. In a market featuring fierce horizontal and OTT competition, and telco service commoditization, VoLTE and RCS give carriers a chance to stand out.
For example, China Mobile recently announced an RCS-based unified communication plan that aims to integrate VoLTE and SNS functions to create a brand new experience for users. This solution will include what is called "new voice," "new SMS," and "new contacts." RCS-based "new SMS" will integrate multiple media and messaging formats and work seamlessly with traditional SMS/MMS, while "new contacts" will present brand new SNS and public service portals based on real phone numbers. China Mobile is currently reconstructing networks for unified communication. By the end of 2014, they will have implemented nationwide commercial VoLTE and pre-commercial RCS, with the latter to be commercialized in the first half of 2015.
Accelerating 4G adoption
LTE is no longer a niche technology, but VoLTE can be. Verizon and AT&T are in heated competition in the U.S. to promote their LTE services. AT&T focuses on the disadvantages of fallback. When Verizon highlighted its superior coverage, AT&T mocked, "With Verizon Wireless, you can't talk and surf the web at the same time."
Stimulating service consumption
VoLTE enables many services that can influence user decisions and change their behavior. It encourages subscribers to use more voice and data, creating "out-of-bundle" revenue for telcos. Even for telcos that offer packages with unlimited voice, consumption of more services and features can still raise their ARPU.
VoLTE makes voice more relevant; the average VoLTE call duration is 20% longer than the average 2G/3G call. It can also prompt subscribers to call their contacts. For instance, depending on configuration settings, subscribers can receive a prompt to make a call if one of their contacts updates their status on social media to "I feel terrible." HD video calling is another service that VoLTE can do much better than 3G. Many other derivative video services are also supported, such as video email, video call center, telemedicine, replay of voice calls, and viewing of other video during a call. The benefits of VoLTE far outweigh the deployment costs. Return on investment (ROI) is guaranteed.
2014 – The year VoLTE goes mainstream
The superiority of VoLTE is certain; what is uncertain is when you might be able to use it. According to Infonetics, there have been twelve VoLTE commercial deployments to date, attracting eight million users. By 2017, global VoLTE subscriptions will have increased seventeen-fold, reaching 138 million.
According to a 2013 survey by the Global Mobile Broadband Forum in London, 59% of carriers planned to launch commercial VoLTE in 2014. AT&T and Verizon planned to do it at the beginning of 2014 while China Mobile planned to launch it by the end of 2014. DOCOMO, KDDI, T-Mobile, Sprint, and Etisalat also had their eye on VoLTE. Now they are all turning their attention to the bottleneck of VoLTE commercialization – chip and terminal availability. Smartphones that support VoLTE are now reaching the market, with VoLTE-compatible chips now available from Qualcomm, Samsung, and HiSilicon.
