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23/08/2013

Many apps have sprung

Moving to VoIP calls has been a growing trend for some time, partly due to the potential cost savings. This is a huge problem for telecom carriers who now face declining revenues from voice and SMS becausehair and wigs of mobile VoIP and instant messaging. Mobile VoIP is basically the use of applications such as Skype to make calls on smartphones and tablets. Three reasons why mVoIP presents a danger to telecom companies are:

1. 3G and LTE

The near ubiquity of 3G and expansion of LTE across new markets means that more people have access to high data speeds required for using mVoIP. Worries about dropped calls or poor quality audio have largely declined to the point where mVoIP is comparable to traditional calls for most consumers.

2. Smartphone penetration

The explosive increase in smartphone and tablet penetration has driven a corresponding growth in mVoIP adoption, since you only have to download an app to make calls. Many apps have sprung up to take advantage of the large potential customer base.

3. Inexpensive data plans health supplement

The huge price differential between data and voice means that it is many times cheaper to make a one minute mVoIP call than a one minute voice call. In fact, even though data plans have to be bought and paid for, many people consider mVoIP calls to be free.

Incumbents in any industry faced with disruptive new technology usually react by either trying to block it, cautiously permitting it or in some cases even competing with it. Mobile operators had initially tried to stop adoption of mVoIP by prohibiting such apps on their network. But increasing customer demand has led to a change in their attitude.

AT&T for example, has allowed the use of calls through Skype but only through Wi-Fi and not 3G. Carriers with less revenue and market share to protect, such as T-Mobile, are experimenting with their own VoIP offering. In the US, T-Mobile offers its customers hardware that routes their normal calls made at home to the customer's Wi-Fi. This appeals to those who can save the minutes included in their plan and helps operators who are keen to reduce strain on their networks. Other operators are launching their own mVoIP apps to take advantage of this trend. While it cannibalizes their voice revenues, carriers hope to monetize it through advertising and partnerships later on.

Though many carriers are experimenting with VoIP, the technology remains a threat to their business model.p loan Operators must perform a difficult balancing act between customers demanding access to such apps and protecting traditional revenue streams.