Do we have the Telcos attention now!
Telcos Will Fight Back Against IP Telephony Firms,
Telcos Will Fight Back Against IP Telephony Firms, Says Ovum 06/17/98
BOSTON, MASSACHUSETTS, U.S.A., 1998 JUN 17 (NB) -- By Sylvia
Dennis, Newsbytes. Despite the fact that telecommunication carriers are apparently ignoring the threat that the Voice over IP (Internet Protocol) services pose, Ovum's latest research suggests that the carriers will begin to fight back soon, once they start to lose valuable international call traffic.
According to Ovum's report, entitled "The Impact on Telco Services and
Revenues," the IP telephony service providers market will reach the $1 billion level by the year 2005.
While this is a massive market, Ovum's report predicts that new IP Services from voice, fax, and corporate data traffic will affect future telecom operators' revenues, but not as significantly as has previously been predicted.
Currently, the independent information technology (IT) and telephony
research company says, VoIP and fax service providers are now focusing
their attention on the lucrative outgoing international traffic market, trying to undercut telecommunications carrier revenue streams. Stewart Anderton, a senior consultant at Ovum and author of the report, said that, at the moment, the main IP services are Web access for information and e-mail.
"Although video and e-commerce are much talked about, the actual impact on telco revenues from these areas will be minimal. The main threat to telco revenues will be as a result of other IP based network operators taking voice and fax traffic from the telco circuit switched networks," he said.
According to the report, IP has the potential to offer carriers a number of benefits, including the fact that international accounting rates can be avoided and that it provides a unifying layer over which a wide range of services -- data, voice, fax, video -- can be carried on public and corporate networks, as well as the Internet.
According to Ovum, in addition to these benefits, IP also allows improved efficiency in the use of capacity and takes advantage of faster, dynamic, router switching technologies which are continually being developed.
Anderton, meanwhile, said that IP allows freedom to operate on profitable international routes, as well as enabling integrated Web/telephony services to be developed.
"Some of these benefits are not long term. The average price per minute of international calls will certainly decrease, driven by liberalization, competition, growth in IP based services, and cheap availability of bandwidth," he said.
According to Anderton, currently, the Internet service providers (ISPs) are joining alliances to help them provide a wider range of Internet access, voice, and fax services.
In his report, he notes that fax traffic is an easy option for new service providers to target for a number of reasons. Firstly, the market drivers for fax over the Internet are more compelling than those for voice, posing a greater threat to telcos particularly for international traffic.
Secondly, he says, fax over IP is easy to implement in both a corporate network and by a service provider. IP, he argues, is the established de facto unifying layer for many corporate networks.
According to the report, however, the uptake of IP services will not be without difficulties. The current ITU-T (International Telecommunications Union) standard is complex, and a simpler protocol would allow new products and applications to be introduced more easily.
According to Ovum, telecom industry experts continue to develop the
standard to improve its scope and operation. However, the shortcomings of the standard will delay wide scale and cost effective deployment and will not stimulate multiple innovative applications as rapidly as is hoped.
The report concludes that IP telephony service providers (ITSPs) are forecast to carry up to $1.0 billion of international traffic by 2005, assuming a decline in international tariffs during this time.
In the same period, the telecommunications carriers are forecast to grow their international IP telephony services to $900 million. After this time, the telcos will recover their ground through the provision of services and network economies.
According to Anderton, the telecommunications industry is excited by the opportunities presented by new wide ranging IP based services, but, he argues, for the industry to really succeed, it will have to have tight integration with the existing switched world of the PSTN (public switched telephone network).
"The rapidly declining cost of international bandwidth and decline in
accounting rates will result in call costs being limited by the local origination and termination costs. Although new entrants are well placed to exploit the immediate opportunities, the telcos retain many advantages, which, if exploited, will leave them stronger and more flexible," he said.
"IP: The Impact on Telco Services and Revenues," costs 2,495 pounds
($3,995) and is being delivered in two volumes. Volume one, published in July, covers the IP telecoms services and looks at the key issues surrounding voice, fax, and corporate networking, and forecasts core IP applications traffic.
Volume two, published in December, assesses the impact on telco profitability and includes recommendations for the main key industry players: operators, suppliers, and regulators.
Ovum's web site is at ovum.com
regards,
Mark . |
