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Skype-like Services Primary Cause of Declining Revenues in Telecom Says Global Survey

March 13, 2007 By News Report

A survey of communications executives released yesterday by Oracle and conducted by the Economist Intelligence Unit revealed that over 80 percent of industry executives believe that voice calls will no longer make up the primary revenue source for communications carriers within six years. Furthermore, over half of the senior executives questioned believe this will happen within the next four years, emphasizing the need for operators to immediately identify and develop new revenue streams to avert steep declines in their business.

Survey results show that worldwide, executives believe that new online Voice over IP (VoIP) services, such as Skype, are the greatest threat to the fixed line revenues with 68 percent of respondents identifying VoIP operators as the primary cause of declining revenues. Additional results include:

72 percent of executives believe that introducing new services is the most effective strategy to counter falling voice revenue, much more so than pricing changes or marketing initiatives.
65 percent of respondents comment on bundled triple-play offerings as important or critical, emphasizing the importance of the overall service packaging within the communications industry.
51 percent of executives say mergers and acquisitions with mobile operators are strategies they are most likely to pursue in the next two years.

Executives in every region cited operational cost efficiency as the main obstacle in developing new revenue streams. Respondents acknowledged that service providers must act now to upgrade their core networks, streamline their organizational structures and business processes and must provide greater functionality and more compelling user experiences, such as converged instant messaging, in-call-content sharing and push-to-talk over cellular. Doing this is vital if they are to compete effectively with smaller, highly mobile start-ups leveraging disruptive IP-based technologies and platforms.

"The global communications industry is changing drastically and rapidly," said Denis McCauley, director, Global Technology Research with the Economist Intelligence Unit. "Our survey results illustrate a sense of urgency for fixed-line and wireless service providers to deliver new services for their customers in order to remain competitive."

"The results from the global communications community clearly demonstrate how important it is for both fixed-line and wireless operators to act immediately," said Bhaskar Gorti, senior vice president and general manager, Oracle Communications Global Business Unit. "With the rapid decline in voice revenues and the reality of an ever changing competitive set, customer service providers must accelerate their development of new revenue opportunities."

The Economist Intelligence Unit surveyed 115 telecommunications industry executives from around the world in September 2006. The survey covered 36 countries in three regions; 38 percent of respondents were based in Europe, 28 percent in North America and 28 percent in the Asia-Pacific region.

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