And the ‘death of voice?’ debate wages on...
11 September 2012 | Judy Reed Smith
A few weeks ago I was verbally assaulted at a telecoms conference while carrying around the May issue of Capacity magazine and its cover story, ‘death of voice?’.
The irate gentleman manages a company growing rapidly by reselling lots of Plain Old Telephone Service (POTS) to satisfied business customers. We discussed the realities of the marketplace, and ‘Mr Successful Reseller’ argued that significant revenues are generated by old-fashioned voice.
To be fair, he has a point. The voice market, while shrinking, remains at $11.5 billion in wholesale voice today, according to ATLANTIC-ACM forecasts. However, this is down from almost $15 billion of wholesale voice service in 2010 and will be $6.5 billion in 2018.
So, while significant market forces are driving continued erosion, ‘Mr Successful Reseller’ wants you to know the market remains lucrative for his business model.
Among consumers, wireless substitution is a chief source of POTS erosion. The portion of wireless-only stateside homes jumped from 17.5% in 2009 to 34% by 2011 close. In other words, we’re reaching the tipping point wherein having a fixed, home line is the exception, not the rule.
Interestingly, wireless substitution has more or less kept consumer VoIP from gaining the traction that many VoIP players had hoped in the not-so-distant past. Nonetheless, of 84.4 million consumer fixed voice users, 28.6 million currently use VoIP services, demonstrating yet another undercurrent steadily eating away at voice market share. ‘Mr Successful Reseller’ will say he isn’t selling to consumers, and that his resale is finding their millions in businesses.
In the business markets, VoIP adoption increased from 21% in 2009 to 34% this year, according to ATLANTIC-ACM surveys. When I asked ‘Mr Successful Reseller’ if he was losing customers to VoIP due to the additional features, he pointed out that many businesses don’t want the new features, reliable POTS is what they want, and his company is skilled at selling to those companies.
The bottom line for fortunate voice resellers pulling an annuity of revenues is to save for the next venture, as the lifespan of their sweet deal is closing rapidly for consumers and more slowly, but still surely, for businesses.
Voice revenue will have a long tail of shrinking revenues, but growth will be in new directions. However, by then ‘Mr Successful Reseller’ will be sipping MaiTais from his retirement yacht, called Dial Tone.
Judy Reed Smith is CEO of ATLANTIC-ACM. She can be contacted at: email@example.com
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