Subject:::Will High-Definition Voice Be a Game-Changer? - Internet Telephony
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April 20, 2010

Will High-Definition Voice Be a Game-Changer?

By Gary Kim , Contributing Editor

Orange apparently believes high-definition voice quality will stand in relation to traditional voice as high-definition TV stands in relationship to analog TV, or compact disc quality audio stands in relationship to any form of analog audio.

That might be the case, but the analogy is complicated. For starters, though HD voice is incrementally better than digital voice, over a mobile or wired network, the key issue is whether it is  incrementally powerful enough to change the basic economics of voice.

The HDTV analogy provides an example of why the incremental change in technology standards could lead to an incrementally-important new revenue boost, but is much less likely to create an entirely-new business model, or to offer long-term and sustainable business advantage.

Picture quality has lead to incremental revenue gains for multi-channel video providers and to sales of many new TV sets. But there are other forces at work. HDTV has been accompanied by a shift to flat-screen technology, which has been adopted even faster and more broadly than HDTV. HDTV also is an enabler for use of larger screens, which consumers do value.

The point is that HDTV has lead to marginal revenue increases, but has not recreated the existing industry or its business model. Image quality alone does not explain why HDTV is contributing; one also has to look at flat screen displays and larger displays as key drivers.

In the music business, there are similar nuances. The change to CD-quality audio intially was related to a change of platform to physical storage that was more convenient than tapes or records. The change to MP3 formats was driven as much by the enormous change in portability and storage as by sound quality. The iPod works because it is so convenient, not because it sounds better.

One suspects the problem with HD voice is that it does not involve any obvious user-perceived changes in the devices the new application works on.

The other problem is that no technology seems to offer permanent advantage over a firm's competitors. Orange probably is quite right that “high-definition voice is the future standard for mobile communication.”

What is not clear is that Orange can attain permanent advantage once competitors offer it as well. One thing about technology is that if it resonates with the market, all providers adopt it.

Obviously if most competitors decide not to offer HD voice, and if it resonates in the marketplace, that would be a different scenario. Still, the big issue is whether HD voice can have business upside along the lines of HDTV or CD-quality audio, if nothing else changes in terms of the user experience. The examples of high-definition video and audio are different because they occurred at the same time as key changes occurred in the end user experience.

HD audio is better, no question. The big issue is what else could change at the same time so that the innovation actually can change the user experience.

Gary Kim (News - Alert) is a contributing editor for TMCnet. To read more of Gary’s articles, please visit his columnist page.

Edited by Alice Straight

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