Gokul Blog — A conversation on VoIP, IMS, Cisco and Just about Anything

Deeper analysis of VoIP

The FMC effect – History Repeats Itself

Posted by tggokul on February 6, 2007

iLocus has published a report on the impact of FMC on the world communications market. The report predicts a loss of close to $3 billion a year till 2011 for US cellular operators and $1.3 billion a year till 2011 for UK cellular operators who have FMC implentations.

It is a no brainer that the Voice over Wifi minutes would be cheaper than the cellular minutes and this is where the losses will pile up for the cellular companies. The only way they can counter this would be with a higher call volume ( read more subscribers and more minutes) and for more subscribers they would need subscribers to be hooked on to their network ( mostly through useful applications. I have consciously avoided using the word “killer app” because by now I have come to believe that there is nothing like that). VoIP is doing the same thing to the mobile companies what it did to the fixed line companies. History, indeed, repeats itself. VoIP is turning out to be quite an irritant these days to these companies, isn’t it? 🙂

The report has covered 12 countries. I am very curious to know whether India was in that list, because I am sure they would be a slight aberration here. Let me explain. When I was working in my previous startup( which wanted to provid a VAS platform over IP for the mobile/fixed line operators), the Business guys had a chance to meet up with a top executive in Bharti-Airtel (a very prominent landline/mobile/broadband service provider). Our company was trying to explain to him the cost advantages of moving to IP and the whole IMS story.

The Airtel guy retorted that they are currently providing services where the cost of a phone call goes as low as 40 paise (less than 1 cent) per minute. The average monthly bill per subscriber is Rs.150 ($3) and every application is maximum Rs.50 ($1) per subscriber or even free ( like Voice Mail) for that matter. And so if  my company guys were going to talk competitive pricing, it would be the good time to end that meeting ( Needless to say our guys never ever spoke about cost savings to an operator again 🙂 ).

The point he was trying to make was that cost is never an issue in India. (Read my earlier blog on how these service providers are able to provide these services at throwaway prices).So FMC will not have that huge impact on the bottom-line of an Indian (or for that matter a few Asian countries as well) cellular operator. VoIP over Wifi and cellular cost almost the same ( close to nothing). So there are no significant losses.

This report gives me even more reasons to believe that Asia will lead the way when it comes to FMC deployments.

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