Editor’s Note: Welcome to our weekly Reality Check column where C-level executives and advisory firms from across the mobile industry share unique insights and experiences.
The benefits and drawbacks of being a market “first mover” have always elicited a diverse range of opinions. Some claim that first movers must go through trial by fire and learn through their own experimentation, and that it would be more beneficial to launch products and services only after observing the experiences of earlier entrants. Others point to the benefit of being a pioneer to rapidly gain mindshare, customers and market dominance.
Which is the best path? Unsurprisingly, the answer is far from black and white. Variables include whether or not it is an entirely new product or service that is being introduced, the competitive landscape, as well as the nature of the market itself.
The first mover conversation is playing out right now with regards to the speed with which mobile operators should deploy VoLTE networks. In a February 2013 report released by Ovum Research, “Future strategies for VoLTE deployment,” the research firm puts forward that mobile operators should not rush to deploy LTE networks and voice over LTE. Ovum is an important voice on LTE and has put forward significant research in this area, but it is our belief that there are several tangible advantages for mobile operators to be VoLTE first movers.
First movers have path to new, compelling revenue-generating services
In the report, Ovum asserts that early movers will be challenged to generate revenues from VoLTE. Ovum states that, “…it is not entirely clear why operators expect VoLTE to succeed in this area [of new voice services] when they have thus far been unable to develop compelling versions of these services. We do not believe that the prospect of offering new services will be an important demand-side driver (i.e.- a new revenue source) for launching VoLTE. In fact, we think that it will be difficult for operators to make any money from services offered over VoLTE.”
While mobile operators eye the consumer mass market as a quick way to recoup LTE network investments, our belief is that the best and most immediate path for mobile operators to monetize their LTE investments – and generate revenue from advanced communications services offered over VoLTE – is through the enterprise market. It is increasingly evident that unified communications will be the first applications of volume over LTE, enabled in part by the fact that these applications can be delivered today – even as operators migrate from a 2G, 3G network to a 4G network. This allows mobile operators to enter the high-margin UC market with enterprise customers that will migrate to their LTE network as they build out their VoLTE capabilities.
First-mover operator networks will be superior by comparison
The faster speeds, increased bandwidth and richer customer experience VoLTE delivers will render second-mover networks inferior by comparison – a fact that will not be lost on enterprise customers and consumers. Mobile operators are not third party observers when it comes to VoLTE deployments, which means that by not moving first, their networks, services and devices will appear dated.
VoLTE can be a game changer for service providers seeking to deliver compelling UC services such as video calling, instant messaging and presence, Web conferencing to enterprise end users and consumers, regardless of their preferred device or network. Because VoLTE delivers enhanced bandwidth, it results in a superior quality of service for end users.
Done right, early movers to VoLTE will hold a competitive advantage over over-the-top providers. Delivering a consistent user experience is difficult for OTT providers tied to specific applications (i.e. – Skype calling) and devices (i.e. – Google Android phones). Mobile operators, with ownership of the network, are more strongly positioned to deliver a single user experience and become the provider of choice, bringing the vision of mobile UC closer to reality.
First movers can reduce costs and complexity
Ovum acknowledges that transitioning to an IP-based voice platform can reduce the costs of transporting voice and lead to other operational cost efficiencies. For example, mobile operators could serve millions of subscribers from a single rack of equipment, while centralizing deployments of VoLTE – as opposed to relying on mobile switching centers in each city/region – will greatly reduce operational costs. In the report, Ovum indeed states that lower operational costs per customer should be the primary driver of VoLTE early adopters, and that many operators do not place sufficient emphasis on reducing operating expenses.
Operators also have an opportunity to simplify their offering and reduce the number of complexities. With OSS/BSS for example, VoLTE offers an opportunity to simplify management and provisioning of voice and related services, with no more minutes charging, no more text charging, no more feature add on complexities, etc.
First movers have access to strengthening LTE ecosystem
Ovum cites a lack of devices available to support VoLTE and circuit-switched fall back, while also drawing attention to device performance challenges and battery drain issues that have been reported with some LTE phones.
There is no doubt that handsets represent a critical path to successful VoLTE deployment, and we are definitely seeing tangible evidence of a progression from demonstration LTE handsets and devices to commercial products available to users. The Global Mobile Suppliers Association “Status of the LTE ecosystem” study released in August finds that more than one hundred manufacturers have announced in excess of one-thousand LTE-enabled user devices. At this rate of commercialization, second movers cannot afford to wait much longer to support these devices.
IMS will not inhibit VoLTE rollouts for early movers
The Ovum Research report categorizes VoLTE as a “medium-term ambition for many operators as they are still rolling out the required IMS capability in their networks.” Ovum goes on to state that IMS requires a significant financial commitment, and that deployments can be slow.
Historically, mobile operators have found many IMS solutions too complicated and costly to operate. But new, innovative industry solutions are simplifying IMS deployments and changing the cost and complexity dynamics. Price points for all-in IMS solutions are $1 to $3 per subscriber, with a pay-as-you go model, which means that mobile operators can reduce costs and risks with IMS deployments and, in turn, VoLTE. Finally, with IMS anchoring LTE networks, mobile operators have the opportunity to offer traditional voice and high-speed data services, while integrating more advanced services.
“Rushing” connotes moving at a speed greater than logic and preparation might dictate. As the RCR Wireless feature report: “Where are you, VoLTE?” rightly says: “Though network evolution is necessary, that doesn’t mean it happens overnight. There are many players and aspects involved. Operators have to want it and then build it. Manufacturers have to get the technology into handsets and of course, customers have to adopt it.”
With that in mind, mobile operators are not “rushing” to VoLTE deployments, but instead proceeding at a brisk, measured pace that recognizes the first mover benefits, and the risks of being left behind with an inferior network, applications and services.
Scott Hoffpauir is CTO at BroadSoft, the leading provider of software and services that enable mobile, fixed-line and cable service providers to offer unified communications over their IP network.
