Life After Voice

The market for providing international wholesale services in general, and international wholesale voice services in particular, is becoming more challenging. International voice traffic is typically below 5% of total circuit-switched traffic in most developed countries, but it has been a handsome contributor to telco revenues and profits. For carriers in developed countries where competition is well established, wholesale voice, once the mainstay of international wholesale, is now notable for low prices and low margins. Hopes that the worst is behind us are diminished by comments such as that from BT, which in April 2006 commented:

The international voice market is a challenging environment, with price decline running between 10-15% on average and continuing sharp downward pressure on margins.

Faced with this situation, international fixed network operators that provide wholesale services need to make major strategic choices. Their choices include the following:

• international voice - do we get bigger, get focused, or get out
• enterprise services - should we support the telecoms requirements of international enterprises, rather than just the wholesale market
• what do we need to include in a portfolio of IP-based services
• should we partner with other carriers to offer IP-based international wholesale services
• how do we capitalise on growing requirements for supporting mobile content?

In this report, principal analyst Stephen Young, investigates the options open to international wholesale carriers in the light of dramatic changes in the international voice market.