Voice revenues continue to make up around 75 per cent of mobile operator revenues in Europe. While this enormous income stream has been in decline for some years due to intense competition and punishing regulation, operators remain highly focused on protecting this hugely valuable service from slumping at an increasing rate.
One initiative that is being promoted to stem the slide is the deployment of high definition (HD) voice that some operators believe will help differentiate them in an increasingly challenging marketplace.
Orange has been the leader (or, chief hype organiser) having stated that it would conduct a pilot launch of HD voice in the UK and Belgium this spring, followed by commercial deployments in France, Spain and Luxembourg sometime this year. The company went live last year with the technology having used Moldova as its commercial test country.
According to Stephen Sale, from the market research firm Analysys Mason, HD voice offers a potential means to drive up usage and to maintain the perceived value of voice services. It could also support the migration of traffic to 3G networks, and is seen as being relatively easy to implement and has minimal impact on 3G network dimensioning.
Key to the success of HD voice is suitable handsets. Orange claims that its entire handset portfolio will support HD by the end of 2011, and points to HD-enabled handsets that are already available from Nokia, Sony Ericsson, HTC and RIM as evidence of vendor commitment.
But Sale believes that many obstacles remain for HD voice adoption: "More handsets will be necessary in order to support operators' ambitions for the service, and a failure either to interconnect HD voice ‘islands' or to equip mobile handsets with high-quality acoustics could undermine the user experience."
"On balance, we believe that it is a low-risk strategy for mobile operators. As well as supporting the positive perception of network quality, HD will also help to maintain value in a sector in decline," said Sale, adding that he didn't expect operators to charge for the service explicitly, but forecast that HD voice would help to slow price erosion and help operators to differentiate their services against over-the-top players.
While advocates of HD voice - and remember that the patent holders of the required AMR-WB codec include France Telecom and Ericsson--claim that the technology is capable of delivering twice the clarity of ordinary phone calls and is said to be like switching from AM to FM radio, Orange cannot do this alone.
Other mobile operators will need to be convinced that there is a requirement to make the investment, will agonise over the likely ROI and the worry that the essential patent is owned by a rival service provider.
It took operators many years to accept that SMS could be even more successful if they allowed open interconnect--the success of HD voice needs the same understanding. -Paul