The future of international voice traffic

Written by on October 9, 2015 in Features with 1 Comment

International voice traffic

In terms of traffic trends, it is evident that the growth rate for international voice traffic continues to decline, and this, coupled with decreasing termination rates, particularly for mobile destinations, means that top line revenue is under pressure. Over the past several years, traffic growth was fast enough to counter-balance price declines, allowing aggregate industry revenue to grow modestly, but this is not the case anymore.

Volume growth and price declines are now in a precarious balance. With international traffic growth slowing further, and regulators in many countries continuing to apply downward pressure on termination rates, it is likely that revenues will fall overall. Nevertheless, voice is far from dead and net traffic growth is still in the order of 15 billion new minutes of international voice per year. Total international voice traffic grew by 3.5 percent in 2014, and this traffic is forecasted to continue to grow at a slowing pace over the next 6 years, with a CAGR of 2.1 percent.

On the revenue side, we expect the total revenue generated by international voice traffic to stagnate with a CAGR of 0.3 percent over the forecasted period. As a clarification, what we count as revenue for the purpose of this study is the revenue generated by carriers at a wholesale level using international termination rates and does not include retail revenue earned directly from the end-user.

We forecast the number of international voice minutes generated by each subscriber to decline by a CAGR of -0.7 percent over the next 6 years, driven mainly by the increased use of OTT voice applications and substitute communication services such as social media and collaboration applications.

International Wholesale

Essentially we define international Wholesale traffic and revenue in the following formula:

Total international Traffic = Country to Country Direct Traffic + Wholesale Traffic

We forecast that international Wholesale Voice will grow partly due to the fact that a growing number of retail service providers and operators are outsourcing their international business to specialised wholesale providers to instead focus on their core business in their national markets. We think this trend is here to stay and will be reinforced by the evolution of mobile operators to IPX.

The international wholesale voice traffic grew by an estimated 5.6 percent in 2014 and we estimate that international wholesalers transport 69.0 percent of the world’s international voice traffic.

We expect international wholesale traffic to grow by a CAGR of 4.2 percent over the next 6 years.. At that time, international wholesalers would transport 78.0 percent of the world’s total international voice traffic again mainly due to the migration of mobile operators’ voice traffic to IPX a trend that will be accelerated by the introduction of international and roaming VoLTE traffic.

VoLTE will give mobile operators a real driver to move their international traffic away from the traditional path via the incumbent international carrier in their country to an IPX provider capable of guaranteeing an end to end IP path to maintain VoLTE features and capabilities.

In terms of revenue, we estimate the “input revenue” into the world’s international wholesale segment to have generated US$10.4 billion in 2014, and this is forecasted to have grown by 1.5 percent in 2015 to reach US$10.6 billion. Over the forecasted period, we expect the international wholesale segment to see revenue increase by a CAGR of 1.9 percent to reach US$11.7 billion in 2020. This growth is mostly explained by the increased number of international voice minutes being handled by wholesalers, which will make up for the continuing decrease in wholesale rate in our opinion.

If we compare the above with the total wholesale traffic transported by wholesalers (which is a multiple of the input wholesale traffic due to the multiple hops used in the routing of many wholesale minutes), we get a completely different set of results. For example, we estimate that the total (multi-hop) traffic that was transported by wholesalers decreased by an estimated 7 percent in 2014 and we expect this trend to continue with a CAGR of -2.7 percent over the forecasted period.

Wholesalers who do not own any retail traffic suffered significantly more, as many of them saw a decrease in the traffic they transported of between 6 percent and 12 percent, while wholesalers that are part of mobile groups, saw their wholesale transported traffic grow by between 1 percent and 12 percent. What this tells us, is that a growing number of international minutes are sent over higher quality directly terminated wholesale links and that mobile groups are increasingly exchanging traffic directly amongst themselves. A trend that we expect should continue, or even accelerate over the next 6 years.

This is an extract from The Future of International Carriers, a report by Hot Telecom available here.

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Isabelle Paradis

About the Author

About the Author: Isabelle has worked for over 20 years in the telecoms industry. Her personal experience ranges from international Wholesale through to Business Strategy, Marketing and Product Management, along with extensive research and consulting experience. She has worked across all continents and has lived in North America, Europe and Asia. .


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  1. Avatar Thanga says:

    interesting article about wholesale Vs international traffic growth

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