Study by Wireless 20|20 Indicates VoIP Critical

4G operators can gain a clear financial advantage by deploying cloud-based VoIP (Voice over Internet Protocol) delivery solutions.New Windsor, NY August 15, 2011

The technology

According to the technology, 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 as well reveals that deploying a cloud-based hosted VoIP solution could furthermore 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 even though 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

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. Should the contingency arise 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 earnings, moreover 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.