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Global VoIP Wholesale Market

Since 2006 the rapidly growing adoption of smart portable devices such as smartphones and tablets in the residential and corporate sectors is driving the global VoIP services market and the major telecom providers worldwide face a key challenge: the decline of their traditional telephony business. One part of this puzzle is the wholesale voice business.

In the industrialized countries with correspondingly high data bandwidth a small number of key players deliver international telephone calls on behalf of the global industry. A customer of one provider will place an off-network call through applications such as Skype, WhatsApp or Viber, and the wholesale providers as middlemen will terminate that call across the world to the final destination network.

Infonetics Research forecasts

The global VoIP market will climb to US$ 82.5 Billion in 2019

Meanwhile many businesses have migrated over to a VoIP system for its cost-effective, revenue-generating features, not to mention it has become the keystone to how businesses operate. Effective communication means effective business, so it’s no surprise that VoIP has and will continue to see serious growth.

Voice is still valuable

VoIP technology carried over 100 billion minutes of mobile voice calls in 2015 but this accounts only for 6% of 3G subscribers and 2% of standard mobile subscribers.Mobile VoIP applications are expected to reach $36 billion by 2016 with a rising number of users up to 180 million.

This means that huge growth opportunities are still driven in the termination of international calls through mobile-based data applications and next generation technologies such as WebRTC, Hypervoice and XaaS for value added services will contribute to a significant growth in the next 3 to 5 years.

To go along the right path is the challenge

Retail customers will continue to value reliable voice services and are generally happy to pay for unlimited minute plans on fixed networks and nothing will change that. Thus, in the industrialized countries respectively markets the challenge is correspondingly large to fulfill the aim of a sufficient voice quality related to an acceptable profit margin. Moreover this in an environment in which the retail customer is accustomed to receive even higher bandwidth for the same price.

In addition the regulatory measures now influence termination rates and roaming charges, which then lead to increased competition and an effect on the VoIP price advantages. And the named application key players have established partnerships with major Tier-1 Carriers such as 3 UK, KDDI and Verizon and occupy a market-dominant role.

International Roaming – The beloved Cash Cow

International roaming was one of the facilities that made GSM (Global System for Mobile Communication) a truly global success story. However, huge roaming fees were billed to the customers over these years. It was “the cash cow” of the major telecom providers and therefore, of course these Carriers have defended their premium against a regulation of these markets and alternative access technologies in those countries for a long time. In the meantime, this has been adjusted in the industrialized countries, but however, about 20 percent of the large major telecom providers still believe that increasing roaming costs in unregulated countries shall compensate their “losses” in the regulated countries.

And they can, because in these countries structural and technical barriers first must be overcome. The introduction of roaming regulation while mastering these challenges could result in unintended and unforeseen consequences that negatively impact the industry, mobile users and government revenue. 

Africa’s international bandwidth growth to lead the world

Projected international bandwidth demand growth by region

Huge opportunities in unregulated growth markets

These markets include Latin America, Asia Pacific, Africa and the Middle East and Upco Systems has a significant number of direct connections to the respective largest telecom providers. These countries are in various stages of economic development with significant differences. In other words, the overall development depends on local market and economic conditions and the factors such as labor costs, inflation rates, technology platforms, economies of scale and target customer segments will all affect local roaming rates.

Africa for example continues to be the fastest growing mobile market in the world and roaming services, however, are still emerging. While the infrastructure in landline connections in many parts of the continent still remains technically underdeveloped, mobile communication is the driver for economic and social progress. In this environment mobile communication and mobile services will achieve attractive margins for years.

Tremendous potential for VoIP and simple value-added services and applications

Africa leads in mobile banking, because only few Africans have traditional bank accounts. However, most of them have access to a mobile phone. The simple SMS payment system m-Pesa has established itself as a leader in Africa and gives millions of people there now the chance to be part of the economic life. In addition, African immigrants remit billions of dollars to the people in their homeland. Thus, migration has a tremendous potential for VoIP and simple value-added services and applications.