VoIP critical for wireless 4G monetization: Study

NEW YORK, USA: Offering value-added services such as Voice over IP (VoIP) has become critical for the monetization of 4G network investments, finds broadband wireless advisory group Wireless 20/20.

Wireless 20/20's recent research shows that 4G wireless operators can significantly increase their ARPU and improve their ROI by offering VoIP as compared to offering data only services.

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The study further concludes that many operators can see an added improvement in their ROI by deploying cloud-based delivery solutions as compared to directly managing in-house VoIP platforms.

According to the research, launching 4G VoIP service will result in a 25-50 per cent increase in ARPU, a 10 per cent 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 centres, 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 five 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, 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.

Moreover, to the large CapEx investment needed, the operating costs of an in-house solution are in the range of 30-40 per cent 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.”