The international telecoms market was founded and built on transporting voice minutes between countries. However, that traffic has changed dramatically as voice carriage has transitioned from TDM to IP, and the volume and variety of frauds has mushroomed. The revenue available to wholesalers for carrying international voice traffic continues to decline and margins are shrinking even faster. In the light of all these pressures, why do so many carriers continue to offer international wholesale voice services?
Ovum's own forecasts estimate that international wholesale voice revenue will continue to decline (2016–21 CAGR of -4.8%) under the threat from OTT voice and messaging services, such as Apple's FaceTime, Google's Hangouts, and Microsoft's Skype, even though many of these services are mutually incompatible. International voice margins too are in free-fall due to competitive pressures and declining usage. Voice traffic has always attracted cheats, hoaxers, and swindlers. Voice traffic frauds range from the use of grey routes and CLI manipulation to Wangiri and International Revenue Share Frauds (IRSF). Carriers have had to respond with sophisticated (and expensive) fraud detection processes and systems.
Incomes from carrying international wholesale voice traffic prop up many carriers' top line revenue, and high volumes of international voice traffic improve network utilization. But carriers should know by now that revenue and volumes are only part of the story – margin is increasingly important in the highly competitive international wholesale market. A handful of large international carriers (including BICS, iBasis (now part of Tofane Global), Tata Communications, and Vodafone Carrier Services) can exploit their economies of scale by carrying tens of billions of international voice minutes on behalf of other wholesale and retail service providers.
In the light of these unremitting pressures and threats we anticipate and encourage the further consolidation of the international wholesale voice market. More subscale carriers should outsource their traffic to the largest, most efficient and best defended international wholesalers. Now is the time to take a deep breath and decide that the service is best provided by the players who have strong anti-fraud systems in place and real economies of scale. Other wholesalers should instead focus on higher margin, differentiable wholesale services, such as those for content distribution, signaling, and messaging.
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