International long distance providers are facing tough times and difficult decisions in the years ahead, as OTT VoIP services eat an ever greater share of their revenue growth, a new report warns.
The report from TeleGeography asserts that international telephone traffic grew just 5% in 2012 to 490 billion minutes, compared to the 9% growth from 2011. And the percentage of this traffic that was transported as VoIP grew to 34%, from 25% a year earlier.
The report's publicly available executive summary states that while part of the decline can be attributed to weak global economic conditions, the impact of Skype and other OTT VoIP providers cannot be ignored.
Skype's cross-border voice traffic volumes grew an estimated 51 billion minutes in 2012 – more than twice the growth of all international providers in the world combined - to 167 billion minutes. Were Skype's traffic included in the year's call volumes, international voice traffic would have grown a solid 13% in 2012.
Between the OTT threat, telecom market maturation and regulatory efforts to drive down mobile termination costs, TeleGeography warns that the days of steady international voice market growth are over. The firm expects growth to hover at the 4-5% mark for at least the next five years.
While the industry isn't in danger of dying off anytime soon, TeleGeography expects the market pressures to force retail providers to make difficult decisions – including significant consolidation, or outsourcing their international voice termination businesses to wholesale providers.