Despite recent Voice over LTE (VoLTE) announcements from several operators, the industry remains cautious about deploying next-generation voice and video calling services at scale. While interest in VoLTE is rising, most operators are still a year or two away from widely launching these services.
VoLTE gives mobile operators a strategic opportunity to reinforce their position in the voice marketplace, but seizing that opportunity requires acknowledging that the landscape has changed and adapting accordingly.
Services such as WhatsApp, Skype, FaceTime and Facebook’s calling features have attracted mobile subscribers away from traditional operator voice and video services. As a result, operators are no longer the default providers for person-to-person communications, which raises a critical question: how will operators respond?
The penetration of over-the-top (OTT) communication apps keeps growing, driven by widespread smartphone adoption and increasing data connectivity. Consumers now enjoy easy access to these alternative services.
More than half of smartphone users worldwide actively use communication apps, and adoption continues to accelerate. This trend is squeezing margins on mobile operators’ core service revenues. Industry estimates suggest that by 2016 consumer use of OTT apps could have cost operators as much as £32 billion in revenue.
In short, consumers adopting OTT apps have demonstrated a demand for more than traditional telephony services. While the low cost—or free nature—of many OTT apps plays a role, these apps have also quickly introduced HD voice, video calling and other advanced features, creating a clear innovation advantage over many operators.
Operators are realizing they must offer person-to-person voice and video communications that go beyond “plain vanilla” if they want to stay competitive. The key to long-term success is for operators to evolve their business models and acquire the technologies needed to lead in innovation and differentiation.
The migration to IMS and VoLTE presents an excellent chance to embrace the necessary changes and compete effectively in today’s crowded market. Yet many operators remain conservative, planning merely to replicate legacy voice services on the new IMS network.
Operators hold a broad portfolio of legacy services that customers rely on and value. Solutions are available to streamline the introduction of VoLTE and ease migration without fully rebuilding every service in the IMS domain. However, offering only “service parity” ensures subscribers lose nothing in the transition—it gives them nothing new to gain. The likely result is continued erosion of market share to providers delivering more innovative experiences.
To make a meaningful difference, operators must compete on the modern, customer-focused terms set by innovative service providers rather than on outdated assumptions. They should pursue service designs and business models that prioritize speed of innovation, user experience and value creation.
Recapturing consumer interest will require operators to innovate and add clear new value to communication services. Preparing for continuous innovation means making difficult but necessary decisions to phase out obsolete practices and technologies that hinder change.
By becoming more agile and competitive in launching new voice and video calling services over LTE, operators can better compete for market share. When planning VoLTE strategies, operators need to focus on the future: differentiation through innovation will be essential to success.