Free article: There are many ways for mobile operators to capture voice traffic

As mobile operators develop their non-voice services, they must not overlook the substantial opportunity to grow their voice usage and revenue by fixed–mobile substitution. Despite high mobile penetration and the fact that voice already dominates mobile ARPU, the majority of voice traffic in developed markets still resides on fixed networks. The potential to grow voice usage and ARPU is highlighted by great differences among operators, with those in the USA achieving usage levels five (or more) times that of those in Western Europe.

While traffic will generally continue to migrate from fixed to mobile networks, driven by convenience, personalisation and the increasing affordability of mobile tariffs, the extent and speed of fixed–mobile substitution will depend heavily on the strategies adopted by fixed and mobile operators in each country. Innovative marketing, service and pricing strategies by mobile operators can significantly alter the split of traffic between fixed and mobile networks.

Mobile operators are increasingly seeing fixed voice revenues as a source of revenue growth and case studies reveal that a variety of approaches can be successful in accelerating fixed–mobile substitution, as summarised in Table 1.

Table 1: Case studies demonstrate a variety of approaches to encourage fixed–mobile substitution

 

TIM (Italy)

Telefónica Móviles (Spain)

Sprint Nextel (USA)

3 (UK)

O2 (Germany)

Vodafone (Germany)

Operator strategies

Usage-enhancing prepaid services

 ● 

 

 

 ● 

 

 

Prepaid to contract migration

 

● 

 

 

 

 

Usage-enhancing postpaid services

 

 

● 

● 

 

 

IMS-enhanced voice services

● 

 

 

 

 

 

Support MVNOs

 

 

● 

 

 

 

Home zone voice services (including provision of fixed number)

 

 

 

 

● 

● 

Internet access solution (e.g. 3G Internet access or naked DSL)

 

 

 

 

● 

● 

Tariff approaches (voice calls)

Prepaid tariffs that replicate contract tariffs

 

 

 

● 

 

 

Affordable any time, any network minute bundles

 

 

● 

● 

 

 

Home zone tariffs (similar price to fixed networks in home/workplace)

 

 

 

 

● 

● 

Postpaid contracts with minimum usage commitments

 

● 

 

 

 

 

Cheap off-peak calls

● 

● 

● 

 

● 

● 

Cheap group calls

● 

● 

● 

 

● 

 

Reducing call charges (for greater usage)

 

 

 

 

 

● 

Cheap on-net calls

● 

● 

● 

 

● 

 

 

Affordable tariffs are particularly important in encouraging users to use their mobile phones in place of fixed phones. Sprint Nextel (in the USA) has achieved the highest mobile usage in the world with contract tariffs that offer large bundles of voice minutes to individuals or family groups, with attractive options for off-peak and on-net calling. In Germany, Vodafone and O2 have adopted an alternative approach, using home zone tariffs, which price mobile calls in the home (or workplace) at fixed levels.

Vodafone’s recent aggressive move to target fixed revenues with home zone voice and Internet services represents a significant development for the German market and the mobile industry in general. With its unrivalled global presence, large customer base, strong brand and marketing resources, Vodafone’s move may be a prelude to further initiatives in other markets.

The new report Accelerating Fixed–Mobile Substitution: detailed operator case studies presents examples of both mobile-only and integrated fixed–mobile operators in Western Europe and the USA, demonstrating a variety of ways for mobile operators to grow their mobile usage and revenue and stimulate fixed–mobile substitution. Companies profiled in the report include 3, O2, Sprint Nextel, Telefónica Móviles, TIM and Vodafone.