Wireless Connectivity

Most Over-The-Top (OTT) mVoIP (mobile Voice over Internet Protocol) providers are making “very little” money on each user, according to a new report. Yet, the number of OTT mobile VoIP subscribers will reach a billion by the end of 2013.

Among the new data, Infonetics Research (News - Alert) said that last year the average revenue per user was $7.13 a year.

“Since this alone is an unsustainable business model, most providers are turning to advertising, third-party apps and wholesale arrangements with traditional operators,” said Diane Myers, an analyst at Infonetics Research.

In addition, the number of OTT mobile VoIP subscribers worldwide increased over 550 percent last year to over 640 million, the research firm said. Infonetics predicts that the number of VoLTE subscribers will increase by 145 percent in compound annual growth between 2012 and 2017. It also projects that OTT mobile VoIP and VoLTE services together will be a $16 billion business by 2017.

There appears to be a pressing need for mobile carriers to roll out 4G LTE to be able to compete with the number of OTT VoIP applications, which are diverting revenue.

When looking at these latest trends, Tektronix Communications (News - Alert) predicts mobile network operators (MNOs) will acquire OTT businesses and add related partners to remain competitive, according to a report from Gomo News.

Also, OpenCloud predicts that VoIP over LTE/4G will be more popular as an option. “The market can expect a significant bout of merger and acquisition activity in 2013 and beyond, as CSPs [Credential Service Providers] enter into joint ventures with OTT providers and look to accelerate growth in market share by acquiring OTT competitors,” Freddie Kavanagh, vice president for applications solutions at Tektronix Communications, said in a statement carried by Gomo News. “This will help drive premium service offerings and revenue and will also help ensure that OTT services minimize impact on the operator network infrastructure.”

Meanwhile, as Mark Windle, head of marketing with OpenCloud, notes, “As mobile internet access becomes more pervasive, end-users are becoming more inclined to use VoIP apps for voice calls. While OTT providers like Skype (News - Alert) and Viber have prospered on the growing demand for VoIP services, operators are responding through investment in VoLTE and the development of their own VoIP applications. LTE roll-out will make the voice services market much more competitive. Mobile VoIP has only been viable to date over Wi-Fi and 3G+ networks.”

When looking at LTE, there is increased efficiency when employing spectrum than with 3G. This leads to lower costs.

Windle also says that companies “should harness the power of open VoLTE solutions, and the independent developer ecosystems that come with them, in order to cost-effectively establish the competitive differentiation needed to build and retain voice market share.”

The Infonetics report also looked at a variety of different industry players.

“While Skype dominates the over-the-top mobile VoIP space, the market is seeing other applications such as Fring, KakaoTalk, Line, Nimbuzz (News - Alert), WeChat and Viber gain in strength,” Myers said.

In addition, Stéphane Téral, another analyst at Infonetics Research, said in the statement that “On the VoLTE front, the success of SK Telecom’s (News - Alert) VoLTE adoption—3.6 million subscribers in April 2013—has lifted our forecast: we now expect 12 commercial VoLTE networks and 8 million VoLTE subscribers by year-end, with about three-quarters of those in Asia Pacific.”

When it comes to OTT mobile VoIP subscribers, Microsoft/Skype had about 40 percent of the active users of OTT mobile VoIP services during last year.