After years of discussion, hype and delays, Voice over LTE technology is finally real in the United States. Verizon Wireless (NYSE: VZ) plans to launch the technology nationwide in the next few weeks, AT&T Mobility (NYSE: T) has launched VoLTE in a handful of markets, and T-Mobile US (NYSE:TMUS) has launched VoLTE across its nationwide LTE network.
VoLTE essentially follows the path that VoIP technology blazed close to 10 years ago on the wired Internet: Instead of traveling over old-school, circuit-switched networks, VoLTE sends voice calls over IP-based LTE networks. However, for the user, the experience is pretty much the same--you dial a number and then talk when someone picks up--albeit with more audio clarity thanks to HD Voice technology.
HD Voice is just the start for VoLTE though. For example, Verizon is offering VoLTE-powered video calling alongside its HD Voice service. And T-Mobile has promised "additional innovations around Wi-Fi calling" sometime this year. But video calling technology has been around in wireless since 2007. Apple (NASDAQ: AAPL) brought it into the mainstream with FaceTime in 2010. T-Mobile had been toying with Wi-Fi calling since 2007.
Nonetheless, the introduction of IP calling technology in mobile sets the stage for real change in how and when people will use telephony. According to those in the industry, we might see some significant changes to some parts of the calling experience, but phone numbers and regular old phone calls appear to be here to stay.
The first--and possibly most lucrative--change to the voice calling market could be the gradual replacement of wired phones with VoLTE-powered wireless phones. This replacement creates an opportunity for wireless carriers to sell unified communications services to small- and medium-sized businesses.
"What we're starting to work with and we're starting to see the operators looking to plan is offers that would be completely wireless," explained Michael Tessler, CEO of VoIP vendor Broadsoft, on the company's recent quarterly conference call, according to a Seeking Alpha transcript of the event. "So basically moving the LAN infrastructure into the network, into the RAN of the radio network, moving all your devices to being wireless devices, those devices may in fact look and feel like good old hard phones, except the uplink is not physical, it's wireless and really kind of radically simplifying the deployment of unified communications to small and medium businesses and also radically reducing the cost and complexity for those businesses. So no longer do I need a LAN and a switching and all the technology I would normally need. I'm basically outsourcing my LAN WAN in unified communications to the operator."
But the changes likely won't stop there. Pardeep Kohli, the CEO of Mavenir Systems, which is a primary VoLTE technology supplier to U.S. wireless carriers, said that voice calling service with continue to evolve with better quality and more services that combine voice and video. But he said eventually calling services won't be tied to a specific device. "That will change as well," he said.
Kohli explained that, thanks to IP technology, operators will have the ability to uncouple voice services from users' phones. The result could be voicemails delivered to users' computers and voice calls placed through tablets, all using the same number. Kohli said operators could even automate parts of the calling process--for example, a conference calling service could automatically call all the conference's participants at a designated time, rather than requiring callers to dial in to a conference call number. (This technology would be welcome to anyone who has attempted to wait patiently for other callers to join a conference.)
Eventually, Kohli predicted, some operators may even begin offering a sort of virtualized telecommunications service that would allow a user to log in from any IP-connected device to conduct their conversations, whether that's voice, text or video.
"I have a feeling that some carrier will take the next step and become a global [virtualized] carrier," Kohli said, adding though that wireless operators will still need to administer users' phone numbers and will be bound by local telecommunications regulations.
Of course, some are already making notable progress in this area, such as Google (NASDAQ: GOOG) with its Hangouts and Voice service.
Disruptive Analysis founder Dean Bubley, who has written extensively on the future of voice calling in mobile, said that voice services likely will splinter away from phones and into different apps and programs. For example, he said it will be built into enterprise services, social networking services and games--wherever it makes sense for users to talk to each other. Already, WebRTC technology promises to allow website developers to quickly and easily add voice services to their website. And over-the-top messaging apps like WhatsApp and others are rapidly expanding into voice calling services and other areas. Indeed, Twilio has built a multi-million dollar business building IP-based APIs for developers that connect into operators' circuit-switched calling and messaging services.
However, Bubley cautioned, phones and phone numbers will still play a major role in global communications despite the growth of VoLTE technology and alternative means of chatting. "Even looking out five years … I would say it's probably 25-30 percent of LTE users [globally] to be an active VoLTE subscriber by end of 2019," he said, adding that VoLTE users will primarily be clustered in South Korea, Japan and the United States. In places like India and China, where ARPUs are just a few dollars per month, it doesn't make financial sense for operators to build out LTE networks and launch VoLTE. "It's not going to get to more than a fraction of most mobile phone users," he said. The result will be a continued reliance on plain old phone numbers for global communications.
Indeed, even in relatively mature markets like the United States, "we are past the point of peak telephony," Bubley said, noting that Americans are making fewer phone calls than they have in the past. After all, why call when you can text? Thus, there's no direct financial incentive for wireless operators to invest in upgrading and improving their voice offerings. Bubley noted that the move to VoLTE is primarily about reducing operational expenses--by removing voice traffic from circuit-switched networks and onto LTE networks, operators can refarm that legacy voice calling spectrum for LTE services.
As VoLTE rolls out in the United States and more and more calls are transmitted purely through IP, I'm hopeful that at least some carriers will see an opportunity to improve users' calling experience. Every time I navigate through a voice prompt menu--"press zero to speak to an operator"--I feel like I'm traveling back in time 10 years. And why do I still have to listen to voicemails--shouldn't they be emailed to me by now? I think there is money to be made for the operator that is willing to invest in this area. --Mike | @mikeddano