Many people think of services such as Skype (News - Alert) when they hear the word “VoIP,” and that invariably sounds like a reduction in voice quality when compared to traditional cellular and landline voice service. However, many carriers have already secretly replaced their traditional TDM core networks with IP technology. Since carriers are managing access, this version of VoIP is actually quite an improvement over TDM calling, if anything.

Voice-over-IP (VoIP) delivers higher quality and rich unified communications, as well as a greatly reduced price point compared to TDM calling, which is why carriers have already made the switch in many cases. They just aren’t passing along the savings to their customers.

There’s a good reason for this, however: The savings from an IP backbone is one of their tools for stemming declining revenue from competing VoIP solutions and over-the-top offerings such as Skype.

“They’re already benefiting from VoIP in their core and transmission networks,” noted commentator Rob Lith in a blog post recently. “They’re just not passing the benefit on to you, because this will eventually kill their established businesses models.”

He wrote that, for two decades, operators have been battling price declines due to market liberalization, diminishing revenue growth and IP-based competition.

One sign of this is that global voice traffic grew by only five percentage points in 2012, with traditional TDM-based voice growing less than three percent and making up 66 percent of total minutes while VoIP grew more than 25 percent and made up the balance, according to a report by research firm, Telegeography.

Carrier-to-carrier traffic grew by 30 percent since 2008, but revenues have been stagnant at $13.2-billion ever since.

“Retail volume growth and price declines have likewise reached a delicate balance, and revenues may soon fall,” noted Lith. “Clearly, the industry is in trouble.”

In an industry where revenue growth no longer makes up for losses, he noted, with strategies that vary from consolidation deals to shedding low-margin business interests, incumbents are only just surviving.