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FUTURE OF VOICE SPECIAL REPORT: Building a quality future

A new focus on quality looks poised to reinvigorate the voice market. As opportunities such as VoLTE, HD voice and voice over Wifi come down the pipeline, can these new services drive traffic and boost revenues? Guy Matthews investigates.

Such was the decline in voice service revenues over the last few years that a number of carriers simply exited the market altogether. Those that remained have either been forced to discover new ways to slash costs, or turn to innovation in an attempt to try and compete with OTTs. Yet in 2015, several new service areas have emerged that can breathe new life into voice margins.

HD voice is already a reality, VoLTE is gaining ground and voice over Wifi (VoWifi) is an intriguing and potentially complementary additional possibility. Can these services between them be the answer for troubled wholesale voice carriers and their service provider customers?

“Quality is key for stopping the decline caused by squeezed margins,” believes Alessandro Vigilante, head of business development and strategy for the voice business of Colt. “Particularly in the enterprise market, customers are willing to pay a premium price for higher quality, so we’re seeing new products with a higher price point being deployed. Take for instance HD voice in conference calls - we’re seeing customers willing to pay more for this service.”

This renewed focus on quality is, he says, already helping to create opportunities and will eventually drive major new revenues, potentially within the year: “Higher quality isn’t necessary driving people to talk more or less,” he adds. 

“What is changing is the service and how it’s delivered. Users now have the option of paying a higher price for a high-quality voice delivery service.” 

But not everybody is convinced that higher quality necessarily justifies higher pricing: “Will these new services be more profitable?” queries Nick Ford, president, carrier services with carrier IDT.

“I don’t think so, as nobody wants to pay more than they used to. It’s more about being first to grab market advantage and others following.”

Getting competitive

If higher quality is not always a direct route to a higher price, then it should at least add up to keener competitiveness.

The ultimate goal for any service provider is to retain customers, and it is therefore necessary to offer a service that surpasses the competition, believes Andy Huckridge, director of service provider solutions for Gigamon, a vendor of traffic monitoring solutions: “In an increasingly fickle market, where churn is already high, operators need to ensure they’re not only offering the latest technologies, but with service levels that are of excellent quality and offering VoLTE, VoWifi and so on, is one way of doing this. However, it is a hugely complex technology to deploy.”

For operators who want to distance themselves from OTTs, HD voice and VoLTE seem tailor-made. There is commercial logic here as much as technical, believes Martin Morgan, director of marketing with Openet, a vendor of software for network analysis.

He believes LTE provides lower cost of ownership over older networks, so consolidating data and voice services on LTE makes financial sense. “It can also deliver customers a better service experience and enable operators to be better equipped to compete against VoIP and messaging providers. VoLTE enables operators to consolidate network expenses, provide much more efficient use of spectrum, and deliver a wider range of services for their customers,” he adds. 

Belgian carrier BICS is one of the front runners here, having already enabled its IPX for HD voice services and made its entire network VoLTE-ready. It is presently trialling links between operators in Asia with VoLTE, complemented by voWifi. 

“It’s a great way to beat the OTTs,” says Divya Ghai Wakankar, head of voice innovation with BICS. “I met a few of them at MWC, and I could see they were a little bit nervous.”

A joint strategy for VoLTE and VoWifi is becoming a popular option for carriers, with T-Mobile and EE among those to have embarked on this path.

TeliaSonera has also hosted VoLTE for operators in Eastern Europe, which could be another model for the future. 

OTTs looking over their shoulders?

So are OTTs genuinely worried that operators may soon be able to offer much higher quality than they can dream of?

There is some evidence that they are being forced into a reaction. Apple, for example, has already detailed its support for VoWifi in its latest iOS 8 release, and suggested a roadmap for VoLTE on its phones. But it will be proceeding here in collaboration with operators like T-Mobile and Sprint.

Roger Vigilance is marketing director at enterprise IP telephony provider Vonage, a company he describes as ‘an unashamed OTT’. He sees it as wholly inevitable that end users are going to demand added voice quality, in addition to better choice, and that OTTs must rise to meet this requirement: “We believe in working with carriers to help offer that, hence our deal with Tata Communications [in 2013 Vonage struck a deal with the Indian carrier to gain access to its global network]. There’s mutual gain.”

Carriers and OTTs both have challenges. Carriers are committed to  infrastructure and need to upgrade that. For OTTs the problem is monetisation and the business model. The sands are shifting in the voice market, and to be honest nobody has got the perfect solution. Everybody is adjusting.”

VoWifi is the dark horse service area, seemingly part of the plans of both OTTs and operators. It is also predicted by Cisco to exceed VoLTE in terms of minutes of use by 2018, making it a potentially huge game changer. Promoting its take up is the Wireless Broadband Alliance, initially formed to promote Wifi roaming, but more recently has been interesting itself in voice possibilities.

Ton Brand, senior director for marketing and industry development for the WBA, points out that Wifi is generally a user’s first choice when given it as an option over cellular communications: “It’s quick and it’s cheap,” he points out.

“Operators can see that, and rather than just lose sight of the traffic as it goes over to Wifi, they can just offer voWifi and take control back. Customer retention is important.”

For an MNO moving to VoLTE, he says, voWifi is not a big additional technical jump to embrace: “SIP back ends work on both,” he explains. “There’s an OTT aspect too, with a lot of Wifi only operators now appearing. Operators can counter this by making the right strategic voWifi move.”

Wifi continues to be a key connection for end users, with around 80% of data estimated to be consumed on Wifi – both at home and in the workplace.

VoWifi, by not being dependant on the radio network, allows service providers to offer coverage in geographical locations where they were previously unavailable.

This could open up new potential markets in rural locations for service providers. “Of course, with the introduction of these new technologies, service providers must ensure an end-to-end view of all services to meet with the higher customer demands when it comes to service quality,” says Andy Stubley, VP of sales and marketing with SysMech, a developer of Big Data applications and platforms.

“Therefore, the chosen service assurance system must be capable of easily integrating VoLTE, HD voice and voWifi data to truly reap the benefits of improved quality in the voice market.”

Between them the various high quality voice options could do a lot to revolutionise the wholesale sector. Benefits such as low latency call setup times, HD voice clarity, reliable calling sessions and calling line information have the potential to take voice to a new dimension. If higher call volumes don’t result, then surely better customer satisfaction will, with users experiencing calls without delays or breaks as the norm.

And as voice quality changes for the better, so high spending customers will be enabled to consume more data too through retail bundles, segmented pricing and unlimited plans. Going further forward, operators can further build out VoLTE capabilities by leveraging intelligence tools, offered through IPX networks, letting them monitor network performance in real-time.

But Christian Michaud, senior vice-president of product and business strategy in the global voice solutions business unit for Tata Communications, warns the industry not to get ahead of itself: “Delivering high-quality is definitely an opportunity for new business in the future,” he suggests. “In the shorter term, we’re not seeing much HD voice traffic yet, but we’ve got a lot of routes open for it and enabled its transmission.”

The carrier is at the trial stage with VoLTE, and initially aims to be purely on the transport side, over IPX. It is also exploring a number of VoLTE roaming solutions.

A radical new dawn for voice

Is this shift to higher quality a radical new dawn for voice, or should it be seen as a slow evolutionary path? 

“Well, I don’t think we’ll be seeing huge traffic or revenue in 2015,” says Michaud. “In the longer term these services are an opportunity, definitely. That’s why we are investing. This will all lead to ultimate growth in the voice business and the gaining of market share from OTTs. VoLTE in particular puts operators back in the voice game. OTTs have been riding on the fact of convenience, but users also want ubiquity and quality. We’ll see a more balanced market, I think. But the OTT sector is not about to collapse.” 

There are challenges and potholes on the way, warns Dries Plasman, VP marketing and product management, for Voxbone, a provider of virtual local phone numbers:

“Consumers can experience a higher quality of service, but only if they are using on-net services which support HD voice,” he says.

“As soon as a call needs to be made with a consumer on another provider’s network, the quality of the call will drop to the quality we are all used to today. This will only change when wholesale carriers agree on how, from a technical and commercial perspective, to exchange HD audio and video calls. Only when this is done, in other words when HD multi-media communications have become ubiquitous, without borders between networks, will telecoms operators have a unique selling point compared to OTT providers and see traffic on their networks increase again.”

But the gains should be evident. IDT’s Ford says he is upbeat about the future of voice, despite its challenges: “Voice is, let’s remind ourselves, still a huge part of carrier revenue,” he believes. “Quite a few have walked away from it – and come back. Voice is not going away.”