TMCnet Feature Free eNews Subscription
June 10, 2013

What is the HD Voice Revenue Model?

By Gary Kim, Contributing Editor

Some 73 mobile networks globally have launched high-definition voice services in 54 countries, according to the Global mobile Suppliers Association, up by about 70 percent, year over year.

These mobile networks operate in countries including: Armenia, Australia, Austria, Belgium, Bulgaria, Canada, Croatia, Czech Republic, Denmark, Dominican Repupblic, Egypt, Finland, France, Germany, Hong Kong SAR, India, Indonesia, Ireland, Israel, Italy, Jordan, Kazakhstan, Kenya, Luxembourg, Malawi, Malaysia, Mauritius, Moldova, Netherlands, Nigeria, Norway, The Philippines, Poland, Portugal, Qatar, Réunion, Romania, Russia, Rwanda, Saudi Arabia, Serbia, Singapore, Slovak Republic, Slovenia, South Korea, Spain, Switzerland, Taiwan, Thailand, Turkey, UAE, Uganda, the United Kingdom and the United States.



What might be less clear is the HD voice business model. So far, it isn’t clear whether the revenue model is direct or indirect. A direct model would entail subscribers paying incrementally more revenue for the HD service than for a standard definition voice capability.

The other model is indirect, and provides value by enhancing experience, thereby attracting or retaining customers who want the feature. That works so long as all the other competitors do not adopt HD voice.

So far, it appears the indirect revenue model is most prevalent. Some might say that is the problem with HD voice, though. It is an innovation that users can hear, but not yet an innovation that necessarily generates direct new revenue.

Some might liken HD voice to e-mail, an application that drove users to adopt dial-up Internet access.

The problem is that most people already use mobile phones, while fewer people feel the need to use fixed network voice.

In the former case, HD voice does not directly drive incremental subscriptions, while in the latter case HD voice might stem so amount of erosion, but seems unlikely to reverse the trend of landline voice service abandonment.

In some cases, the issue might be how much service providers or mobile device suppliers are willing to spend, incrementally, to provide HD voice capability even if there is no direct new revenue opportunity.

So far, service providers are starting to opt for providing HD voice for strategic reasons. Telcos have made such decisions before, as when investing in fiber to the home essentially to trade market share with cable operators.

Strategic investment decisions (you get to keep your business), though not traditional rate of return decisions (what is the payback from this investment versus another) nevertheless sometimes are necessary.

HD voice might be one of those sorts of decisions.




Edited by Alisen Downey
» More TMCnet Feature Articles
Get stories like this delivered straight to your inbox. [Free eNews Subscription]
SHARE THIS ARTICLE

LATEST TMCNET ARTICLES

» More TMCnet Feature Articles