We anticipate that global fixed voice revenues will decline at a faster rate, with a CAGR of -4.9% over the same period, from $418billion during 2008 to $309billion by 2014. Asia-Pacific will perform similarly with a CAGR of -2.8% in terms of lines and -5.8% in terms of revenues over the same time frame.
Despite pressure to de-prioritize legacy services, fixed voice should not be ignored. In 2008, revenues from fixed voice equated to 63% of that derived from mobile voice. By 2014, fixed voice revenues will still amount to 40% of mobile voice revenues, which will also be declining by that time.
Fixed voice lines and revenue declines will vary by market, driven by various factors including differing levels of Fixed Mobile Substitution (FMS), VoIP substitution, operators’ strategies, cultural behaviour, economic conditions and existing telecoms infrastructure.
Generally, in the short-term we expect broadband-led and mobile access substitution to cause further declines in fixed voice channels.
Substitution from VoIP and naked DSL will also continue, although this effect will vary substantially from country to country, depending firstly on the degree to which large market players actively market and support VoIP services, and secondly on whether or not Naked DSL has been mandated by national regulatory authorities.
Operators have been left to manage the decline in fixed voice, and as a result, initiatives such as subscription-based pricing and bundling have been widely implemented. However, despite continued development of more sophisticated packages, these initiatives look to have reached peak effectiveness.
The stickiness of broadband and cheapness of bundles relative to stand-alone products is helping operators to slow the decline in fixed voice subscriptions to a degree, particularly in those countries where Naked DSL has not been implemented. However, ADSL’s reduced competitiveness as a broadband technology in advanced markets means that it will be increasingly difficult to bundle broadband with PSTN access.
Additionally, some broadband FMS, especially at the low-end has begun, as wireless broadband alternatives gain more traction. Future upgrades to mobile networks could allow mobile operators to attract more fixed broadband users to their mobile broadband offerings, which is why it is imperative that fixed operators embrace next generation broadband in order to maintain their advantage in this market.
In terms of call volumes, FMS will continue at a steady rate, with ever-increasing mobile buckets of minutes contributing to this trend.
Furthermore, the convenience of mobile relative to fixed, and the converging trend in the price of the mobile and fixed voice minutes will result in users continuing to use mobile telephony even when they are within reach of a fixed line.
As a result, we expect call substitution to continue to grow at a greater rate than access substitution.
