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October 15, 2014

Voice Market not Declining as Fast as Might Appear


By Gary Kim Contributing Editor



“While there is a common perception that global fixed-line subscribership is in free-fall, and that consumers are abandoning fixed lines en masse in place of mobiles, the reality is not so clear-cut,” TeleGeography argues.


Like many observations about the telecommunications business, there are nuances. From 2002 to 2013, the largest 15 global service providers lost 69 percent of their former revenue per subscriber, according to the IBM Institute for Business Value.

Over the same period, those service providers experienced profit margin drops ranging from four percent to 22 percent.

At the end of 2012, U.S. incumbent local exchange carriers (telcos) had 34 percent market share of the consumer voice market, 14 percent of the high speed access market and 10 percent of the video subscription market.

Put another way, incumbent U.S. telcos have lost about 66 percent of their peak phone lines. In some cases, telcos have lost 70 percent of the lines they had in 2000.

Some of those lines have been displaced by use of mobile phones. Most have simply shifted to supply by competing service providers, especially cable TV companies.

While the U.S. peak occurred around 2000, it appears the peak for global fixed network voice accounts happened around 2006.

But there are nuances. Adding back VoIP lines, which in many instances represent the way competitive and incumbent service providers supply such services, the drop has been less precipitous.

Skeptics might note that one reason is the frequent requirement that a voice line (either VoIP or switched access) be purchased in order to buy high speed access service. Still, even counted that way, fixed voice lines are declining, overall.

Total (PSTN and VoIP) global fixed-line voice subscribers peaked at 1.29 billion in 2008, and have declined at a compounded annual rate of 1.3 percent since, TeleGeography notes.

“The fixed voice market is in a period of gradual long-term decline,” TeleGeography says. But a shift in technology matters. “While switched telephone lines have declined at a compounded rate of four percent per year, VoIP subscribers have grown 18 percent annually, helping to offset much of the decline in switched phone lines,” TeleGeography says.




Edited by Maurice Nagle
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