VoIP critical for 4G network monetization: Study

Added by on August 16, 2011

Wireless 20/20, a leading broadband wireless advisory group and the developer of the industry-leading WiROI™ 4G Business Case Analysis Tool, today announced results of their study which concluded that offering value-added services such as VoIP has become critical for the monetization of 4G network investments. The research study shows that 4G wireless operators can significantly increase their ARPU and improve their ROI by offering Voice over IP (VoIP) as compared to offering data only services. The study further concludes that many operators could see an added improvement in their ROI by deploying cloud-based delivery solutions as compared to directly managing in-house VoIP platforms. The results of the analysis are published in a white paper titled “Maximizing Operator Value from VoIP Services.”

According to the research, launching 4G VoIP service will result in a 25-50 percent increase in ARPU, a 10 percent increase in IRR and a 5X-10X increase in NPV versus a data-only service strategy. The study looked at a range of operators, ranging from national deployments with many urban centers, to low density rural environments. In today’s competitive environment, 4G operators need to offer a complete suite of value added services to gain and keep subscribers without yielding market share to competitors. The conclusions of the detailed business case study also reveals that deploying a cloud-based hosted VoIP solution could further increase IRR by an additional 5 percentage point for many operators.

“Operators deploying VoIP over 4G networks are faced with a critical decision as to whether they should build and manage an in-house VoIP platform or partner with a cloud-based, hosted VoIP solution provider,” said Haig Sarkissian, Principal Consultant of Wireless 20/20. “We found that although the average VoIP revenue contribution per end-user is largely the same, the investments needed and the ROI vary drastically depending on whether an in-house approach or a hosted solution is used.”

The study looked at the differences in cost structure, profitability, time–to-market, back-office flexibility and the investment risk profiles of the two implementation options for a range of different types of operators. In addition to the large CapEx investment needed, the operating costs of an in-house solution are in the range of 30-40% of the total VoIP revenues, in addition to call termination charges. This adds both a financial burden and an organizational support burden, putting a drag on the profitability of VoIP services, even for the largest operators.

Haig Sarkissian concluded, “We recommend that 4G operators include value-added VoIP services to their offers in order to monetize the full potential of 4G networks.” “The analysis published in the white paper demonstrates the viability of a hosted VoIP solution. The positive financial impact of VoIP can be maximized by implementing a cloud-based solution,” he added.

The white paper can be accessed at: http://www.wireless2020.com/media/whitepapers.html

About Wireless 20/20, LLC
Wireless 20/20 is an independent market research and consulting company focused solely on the broadband wireless market. Wireless 20/20 has helped over 50 broadband wireless operators around the world build business case, analyze market opportunities, complete technology and vendor selection, and develop network roll out strategies.  Our principals have been engaged in the wireless industry since its inception and have a thorough understanding of the technical, business and product issues surrounding the development of wireless devices, equipment, networks and services. For more information visit: wireless2020.com