VoLTE Growth Drives 2014 VoIP Market

Following a tremendous 2013, telecom service provider VoIP and IMS equipment and subscriber revenue growth has tapered in 2014. But, it’s still in positive territory, with the market up 5 percent in the third quarter from a year ago according to market research firm Infonetics Research. Interestingly, that’s largely being driven by uptake in voice over LTE (VoLTE)—which may have implications for the business VoIP market as mVoIP offers start to come to market.

The firm’s third-quarter report on the market found that the market has reached $1 billion, on the back of 11 operators across the globe -- in the US, South Korea, Hong Kong, Japan and Singapore – that have launched commercial VoLTE services.

"We expected growth in the service provider VoIP and IMS equipment market to slow this year as large operators such as AT&T, Verizon and NTT DoCoMo commercially launch VoLTE and utilize capacity on IMS networks,” said Diane Myers, principal analyst for VoIP, UC and IMS at Infonetics Research. "VoLTE deployments will remain the most important driver, though wireline is still making strong contributions."

There were 12 million VoLTE subscribers worldwide in 2013, mostly in South Korea. But indicative of the growth expected, by the end of the year VoLTE subscribers should increase to 51 million. Meanwhile, in 2013, there were 1.5 billion mVoIP subscribers worldwide, the bulk using over the-top (OTT) applications like Skype—so it will be a challenge for operators to differentiate their VoLTE offerings in order to monetize them.

 “VoLTE rollouts are taking off, but there is no business case for it yet, and dubbing it as ‘HD voice’ is misleading because there are already 100 HD voice networks running on HSPA around the world,” said Stéphane Téral, principal analyst for mobile infrastructure and carrier economics at Infonetics Research.

Myers pointed out one success story: “In the highly dynamic over-the-top mobile VoIP market, Japan-based Line has topped Skype as the market leader, capturing roughly a quarter of worldwide active users in 2013,” she said. “Line’s been able to successfully think outside the traditional voice box, offering paid services through application add-ons like games and stickers that not only create a revenue stream, but also increase usage of core services.”

Cracking the business market however may be even more difficult, given the existing penetration of unified communications offerings, many of which already have mobile extensions.

For now, on a regional basis, EMEA (Europe, Middle East, Africa) and CALA (Caribbean and Latin America) notched VoIP revenue gains in 3Q14 from the year-ago quarter, North America was down slightly, and Asia Pacific declined after a strong Q2. Infonetics expects additional operators in Asia Pacific and Europe to launch VoLTE services in 2015, leading those regions to additional growth.

Myers also found that the top four revenue leaders in the carrier VoIP and IMS market in 3Q14 were, in alphabetical order, Alcatel-Lucent, Ericsson, GENBAND and Huawei.

Edited by Alisen Downey