Monday, January 29, 2007

PSTN’s Fear Of Losing Revenue To VoIP: It Can Be An Illusion!

It is apparent that Voice Over Internet Protocol (VoIP) is the reality of future telephony. The cost effective VoIP solution will continue to attract more people in the year to come. However, what is happening on the other side of the coin? Can the VoIP providers achieve same amount of revenue as Public Switched Telephone Network (PSTN) providers? I believe VoIP revenue can supersede the PSTN revenue.

A Case Study:

My claim is best described with a paradigm. Bangladesh, a developing country from South Asia is yet to legalize VoIP. The state owned telephony body Bangladesh Telegraph and Telephone Board (BTTB), of Bangladesh wants people to stick with the traditional telephony in order to protect their income. In the year 2005-06 their revenue earning was 1,330 crore or 13,300 million Bangladeshi taka (tk). If we look at the graph-1, we will see their revenue has been dropping considerably in the hand of excellent cellular telephony infrastructure of Bangladesh and illegal VoIP for last few years. Now if Bangladesh legalizes VoIP and BTTB embraces VoIP, what will happen to their income generation? Certainly with cheap VoIP rate it will go down with same number of users. However, there are ways to expedite the revenue which is described in the next section.

Graph 1: BTTB’s Revenue Graph.


Graph 2: BTTB’s User Graph

If we look at the graphs (1 & 2) again we will see the number of users had been increasing but the revenue was dropping. Typically, it should be the other way around. With the increasing number of users the revenue should go up. However, this simple user-revenue relationship can be used to predict that VoIP revenue will supersede the traditional telephony.

It is explicable that the number of user will increase with VoIP. If Bangladesh had 10 million VoIP users which is 7% of the current population (147,365,352)with a monthly fixed charge of 300 Bangladeshi tk, the revenue of the 2005-06 seasons for BTTB would be 36,000 million Bangladeshi tk. This is much higher than the income of BTTB’s traditional telephony in the same year. This significant increment in the revenue scale should wash away any concern of BTTB regarding Return On Investment (ROI) of VoIP infrastructure. Currently Bangladesh only has 1.07 million land phone users. However, current cellular user expansion of 22 million users is a good indication of the demand of telephony in Bangladesh.

Brazil being listed in the list of developing countries has 42,382,000 users while her total population is 188,078,227. Look at the numbers again. Quite similar to Bangladeshi population but the number of telephony users are much higher.

In the meantime, Vonage, one of the largest VoIP providers of U.S.A has earned 261.939 million US dollar according to the 2005 calendar with total user of 2 million subscribers. However, VoIP provider such as Vonage earns not only from mere telephony but also from other sources of services that can be provided with VoIP with more ease. What are the other sources of income can be?

Other Sources of Income for a Voip Provider:

A VoIP provider can be an ISP. Thus the same organization can expect revenue not only from VoIP telephony but also from other sources of ISP’s profits flow. While eyeing the uprising trend of product support and telemarketing, it is obvious that call center business is a good choice for the VoIP providers.

Beside these Internet Protocol Television (IPTV) a digital television service delivered over the Internet is becoming one of the most glittering sources of income for the Internet community thus to the VoIP providers. One of such recent boom is Joost from Skype.

Moreover, existing VoIP providers are already exploring other sources of income. For example, Vonage’s enhanced 411 dialing, it charges 99cents per call. User can come to know about weather, horoscope and many others regularly appended services from 411. As VoIP protocols can be affable with all other existing Internet protocols, VoIP provider can come out with more and more lucrative services from the Internet to the telephony. For example, few years back nobody had thought of Google’s AdSense which can fill up your pocket with other’s hits.

Finally, it is worthwhile saying advertisement can provide a huge income to the VoIP providers. If we look at the picture of the VoIP telephone set, the main difference we will notice between this particular phone set and any traditional phone set is the screen. It is perfectly suitable to show an advertisement in the screen when a user talking over the telephone. It is necessarily will not hamper the telephony quality. When the phone is not in use, the advertisement can be loaded from the central server into the local memory and can be played later. More trial and error will bring perfection to such system. If we look into the television and telephone usage of U.S.A, we will see more then 90 percent of the people are using both. Thus the telephony advertisement must make a good inroad for explosive revenue for the VoIP provider. Moreover, I see such a system is a speedy version of telemarketing.

However, some of the statistics in this writing are loosely coupled but not groundless. It is a positive indication, especially, to those countries that are yet to legalize VoIP. Obviously some other partial economical factors have played their role in the mentioned examples. In spite of all these, it is rewarding to march forward with VoIP which does not necessarily mean immediate replacement of PSTN. Moreover, local investment in Internet or VoIP infrastructure can bring global market in your doorsteps.

5 comments:

Anonymous said...
This comment has been removed by a blog administrator.
Anonymous said...

Nice...Best of luck.

Anonymous said...

Too much futuristic.

Anonymous said...

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Dont forget!

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