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January 21, 2013

Voice is Not Dead Yet, But That Day is Coming

By Gary Kim, Contributing Editor

“Voice is not dead yet,” says Stephan Beckert (News - Alert), TeleGeography VP. On the other hand, the end is coming, for voice as a major revenue source, he said during a workshop at the Pacific Telecommunications Council.

The good news is that volume is growing, if more slowly than in past, and global revenue is stable, overall. That will vary by region, so the news is not universally so good. But price declines have moderated and there still is no clear substitute for the PSTN.

On the other hand, as optimistic as Beckert says he is, the end is coming. He points to the example of international telegraph revenue, compared with replacement international voice revenue. 

Image via Shutterstock

Until 1950, international telegram revenue exceeded international voice, he points out, a long time for the newer product to surpass the older product, given that voice began commercial service in the 1880s, so transitions to substitute products can take quite a long time.

The bad news is that revenue has peaked; revenue will dwindle and then virtually disappear, eventually. “We expect flat revenue (globally, in the aggregate) for the next couple of years,” Beckert says.

That message is consistent with what has been said about voice revenue for most of the last five years.

But the changes have been coming for decades. About 20 years ago, prices for international long distance were as high as $1.60 a minute. Over time, they have collapsed to cents per minute, in many cases.

Also, even rates of usage began to slow about 2000. Volume growth was about 14 percent annually, until 2008. Growth has been in single digits since then.

“Annual price changes will only go down over the next 20 years, count on it,” Beckert says.

Edited by Brooke Neuman
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