The future of voice continues to be a hot topic. I'd like to take readers back to a post in RCR Wireless from January 2010 by Derek Kerton, president of the Kerton Group, titled "How low can unlimited voice prices go?"
The thrust of the article is that voice is a commodity, and operators will continue the trend of giving away unlimited calling at lower and lower rates. While not specifically talking about voice over LTE, the assertions Mr. Kerton makes are applicable to the brave new world of LTE where everything is just a data packet.
"So why is it carriers are continuing to lower the price on their cash cow, even as they remove limits? The reason is that voice is a relatively painless thing to give away, and it is decreasing in strategic significance as it becomes clear that data traffic is the future for the wireless industry."
Mr. Kerton goes on to make the point that 'unlimited voice' is, in fact, a capped and known quantity. He calculates that a phone call lasting 43,200 minutes (or the full number of minutes in a month) works out to 2.47 gigabytes. Thus it's possible to calculate the direct impact of unlimited voice.
In his conclusion, Mr. Kerton makes the point that unlimited voice plans are here to stay:
"So the trend in voice is clear. The marginal cost of flinging bits of voice calls is dropping to near zero. As economics suggests, the price in a competitive market will follow the marginal cost. Thus, price per minute has gone to zero."
What does this mean for voice over LTE?
First, I think operators deploying LTE need to decide if they want to offer voice. Sprint doesn't offer voice over 4G with the EVO phone. Recently, analyst firm Northstream suggested that the high cost of investment in IMS for voice might not generate a return on investment.
We believe voice is essential to an LTE launch. Any talk of abandoning voice to over-the-top competitors is ludicrous.
Secondly, operators need to consider how much they are willing to spend to deliver voice over LTE. As the marginal cost of delivering voice drops, the revenues will head towards zero. Thus a massive investment in a new voice infrastructure might not be the best use of capital… and most certainly will not provide any form of return on investment.
But if an operator wants to reuse their existing GSM voice infrastructure over LTE, VoLGA is ready.
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