Is (Mobile) VoIP Driving Down Voice Prices?

In a discussion around VoIP someone recently said to me that he thinks that "non-network operator supplied" VoIP is having a big impact on voice prices, both in fixed and mobile networks. I am not quite sure this is yet the case, however. When looking at prices for fixed and mobile voice calls, it can be observed in most countries where telecommunication was liberalized a decade or so ago, that prices are falling. This has consistently been happening over that time, long before VoIP came up.

From my point of view, falling fixed and mobile voice prices are more a result of competition between incumbent and startup telecom companies, who are offering voice services over circuit switched technology.

Technology has advanced, so in many cases, voice calls are transmitted over IP in the backbone networks of network operators and also internationally, but that's still virtual circuit switching and not 'end to end' VoIP over the Internet. Sure, there are services such as Skype, which are free while the call stays between two users of the same service but all people I know use it as additionally to circuit switched services rather than a replacement.

So why are VoIP services still lacking popularity today? I think it's quality of service and ease of use, in which end-to-end VoIP is still very much behind traditional circuit switched voice. That doesn't mean VoIP isn't catching up, but in my opinion we are not yet at a point where VoIP is a serious threat to circuit switched fixed and wireless voice.

As always, comments are welcome.

5 thoughts on “Is (Mobile) VoIP Driving Down Voice Prices?”

  1. I think you hit the nail on the head:
    VoIP makes sense because it can be made into a more ‘intelligent’ services that follow the user rather than a specific device or location and it can be combined into a rich personal information capability. In reality the service falls short because of user device interface and QoS issues.

    Part of the problem is reaching a saturation level with common program and device interface. If VoIP is simply used to replace person-to-person voice calling the only advantage, if at all, is price. If the QoS falls short then that blows it for most users.

    You can see the formation of what is likely to make VoIP/SIP and extended messaging and social networking services come together: Google, Nokia, Ericsson among others are building the modular approach that can work across devices and several OS environments and making these available to developers. That should unleash greater ability for individual programs to mesh VoIP and other capabilities more harmoniously. there are already enterprise level VoIP suppliers/integrators who are making the shift and its likely this will proliferate into consumer markets as well.

  2. VoIP services aren’t lacking popularity- some statistics put business use at almost half of large (500+ employees) enterprises. Keeping a landline phone system is often a result of the “if it’s not broke, don’t fix it” school of thought, because these systems DO still work, just not as cheaply or as well as VoIP.

  3. VoIP has a natural place in business because its deployment can be localized and inter-connected via PSTN. the case for use on mobile networks is subject the a more varied use environment including varying latency. While latency, jitter and bandwidth performance can be issues on wired Internet connections and networks connected to traditional voice networks, due to the difficulty of the varying nature of wireless environments, networks must be designed to be more robust to the point of ‘overkill’ compared to what would be typical for wire line voice or data networks.

    But, as suggested previously, market dynamics and synergy within the broad context of ICT developments can change the criteria for a shift to VoIP:
    Voice communications, messaging, email, social networking will increasingly work together in a somewhat more seemless array of programs, sites, and aggretations. VoIP better fits into the fabric of development including working with modular social networking frameworks being developed by Nokia, Ericsson, Google, Apple and others.

    The technology has to work but it also has to be what is best leveraged by higher level developments.

  4. Hi Mary,

    fully agree, in the enterprise market VoIP has come a long way in recent years and certainly had a big impact on prices and features!


  5. Martin,
    I think the main issue is infrastructure.
    PSTN/mobile calling is ubiquitous. Not only from the point of quality of service, but from the ability to call from any phone to any other phone.
    VoIP is a bit more complex than that (especially mobile VoIP which usually requires downloading and configuration). As long as this is the case, it won’t replace today’s “legacy” systems. And when it does, it will probably be done by the carriers themselves.


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