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Telecommunications and VoIP in Asia, Oceania, and the Mideast: A Market Perspective on the Major Economies 2005-2011
a market research report
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The
Asian carriers will be losing less revenue next year from Voice over the
Internet Protocol (VoIP) bypass, according to this
Research. International voice telecommunications revenue lost to VoIP
bypass is gradually declining, even as total international calling
continues to increase. The study concludes
that as Asian telecommunications companies bring their international
rates into line with actual costs, the attractiveness of VoIP as an
arbitrage opportunity will diminish, slowing down its adoption
In 2004 VoIP bypass calling revenue amounted
to slightly more than one-third of the $98 billion spent in China,
India, Japan and other Asian countries on international calling. By
2011, VoIP bypass revenue is expected to remain essentially flat at $30
billion while international call revenue jumps to about $160 billion.
Of the 96 billion Asian international calling MOUs expected to be
recorded in 2011, only 22.8 billion will be attributable to VoIP.
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Report Excerpt
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In our 1999 study of international calling, IP Telephony, ISR, and Callback: The Deregulated European Market 1998-2003, INSIGHT predicted a short lifespan for many of the rate arbitrage plays then in vogue, and said: “…if the supposition of some (that IP equipment and transport costs are cheaper than the equivalents in the PSTN) proves to be true, and quality issues can be resolved, then IP telephony will indeed be the wave of the future.” Today, Voice over Internet Protocol (VoIP) is indeed having a direct and measurable impact on international carrier revenues, just as we predicted. But VoIP’s near term impact as an international calling rate arbitrage mechanism is a second-order effect. The impacts we trace on international markets in this study are a precursor, the leading edge, of what telecom carriers will face in their local and long-distance national markets in the near future.
In its role as a key driver for electronic commerce, as well as a facilitator to the diffusion of the Internet, the telecommunications industry has transformed itself as well as economies worldwide. The importance of telecommunications is reflected in its growing share of world output, increasing over the last twenty-five years from 1.6 percent of an estimated $20 trillion in 1975 to 2.9 percent of an estimated $40 trillion in global GDP in 2000. The pace of growth quickened in the last decade of the twentieth century and became a period of unprecedented growth for the telecommunications sector. This growth came to a screeching halt in 2000. Since then, the sector has been through a series of shocks whose effects are still being felt.
Troubles for the telecommunications sector began with the bursting of the “dot.com” bubble in 2000 as a result of the exaggerated expectations placed on the Internet phenomenon. In its wake, many telecommunications companies, either betting on the exponential growth of Internet traffic or having expanded outside their core activities, collapsed. But perhaps the biggest shock for telecommunications sector stakeholders has been the fact that the industry is witnessing a decline in revenue growth rates, which after a twenty-year uninterrupted growth trajectory of unprecedented magnitude, came as a surprise.
This study will seek to determine how much of the decline in revenue growth rates is caused by the one-off factors, and how much is precipitated by structural changes affecting the traditional public switched telecommunications network (PSTN) business models of the incumbent telephone operators as the industry moves to VoIP technology.
In the context of this study, “VoIP” is used in a generic sense to indicate the use of packet switching of voice traffic over the Internet. Hence, VoIP “bypass losses” in this report pertain to that portion of international voice traffic that uses the Internet as a transport vehicle and appears at the termination point as local traffic. VoIP, as we refer to it in this study, is distinct from the packetizing of voice, which has been used in public networks for years, and is used to transport many type of protocols including voice using Internet protocols, voice over frame relay, and voice over ATM, plus combinations thereof (e.g., IP over ATM transport).
INSIGHT’s research suggests that the revenue shocks of the last few years were caused by one-off factors, such as a temporary imbalance between bandwidth supply and demand and the financial markets’ over-exuberance related to the rise of the public Internet. As far as carrier revenue is concerned, however, the downward pressure attributable to VoIP is going to play out over a very long period, and it will be irreversible. Even more importantly for the incumbent telephone operators, VoIP technology will require drastic cost containment action and the adoption of a “new” business model based on the Web service creation paradigm as VoIP technology gains traction.
As we will demonstrate in the chapters that follow, the number of minutes of use (MOUs) and revenue “lost” to VoIP bypass will continue to increase, thereby reducing service provider revenues and, more importantly, operating margins. These revenue declines will be offset by continued strong demand for wireless services worldwide and the addition of wireline customers in the less developed countries. The revenue gains in these segments will not produce a reversal in declining operating margins, however; this can only be achieved through cost reductions.
Hence, we have a revenue paradox: although sector revenues will increase in the aggregate, revenues from voice service will decline. INSIGHT’s research suggests that worldwide revenue losses due to international VoIP amounted to $74 billion in 2002, representing about seven percent of service revenues, which stood at $1.04 trillion. By 2011 INSIGHT Research projects that revenue losses associated...
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complete Executive Summary.
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Market Segmentation
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ASIA
China
India
Israel
Japan
South Korea
Oceania
Australia
Wireline Subscribers
Wireless Subscribers
Terminating and Originating Traffic
VoIP Traffic
Market Revenues, Sector Performance and Revenue Impact of VOIP
Access Lines, Population, and Teledensity, 2002-2011
Inbound and Outbound MOUs with VoIP 2002-2011
Revenue and Per subscriber Revenue 2002-2011
Telecommunications Capital Expenditures 2002-2011
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Table of Contents
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Chapter I
Executive Summary
1.1 International Telecommunications & VoIP
1.2 The Forces of Change
1.3 International Calling Market Analysis
Chapter II
From Telephone Operator to Information Provider
2.1
Telecommunications Tectonic Shift
2.2
Fixed Access Services
2.2.1
Asia Wireline Subscribers
2.2.1.1 China
2.2.1.2 India
2.2.1.3 Israel
2.2.1.4 Japan
2.2.1.5 South Korea
2.2.2
Oceania Wireline Subscribers
2.2.2.1 Australia
2.3
Mobile Services
2.3.1
Asia Wireless Subscribers
2.3.1.1 China
2.3.1.2 India
2.3.1.3 Israel
2.3.1.4 Japan
2.3.1.5 South Korea
2.3.2
Oceania Wireless Subscribers
2.3.2.1 Australia
2.4
Forces of Change
2.4.1
The Internet
2.4.1.1 Asia
2.4.1.2 Oceania
2.4.2
Regulation
2.4.3
An Engine of Economic Growth
2.5
The Collapse of the Old Telecommunications Business Model
2.6
VoIP as the New Paradigm
2.6.1
VoIP as Transport
2.6.2
VoIP Operational Advantage
2.6.3
VoIP as Value-Added Stage
2.6.4
The Impact of VoIP on Regulation
Chapter III
Traffic Trends & Future Growth
3.1
Trends and Growth Overview
3.2
Asia Terminating and Originating Traffic
3.2.1
Terminating Traffic
3.2.2
Originating Traffic
3.2.3
China Terminating and Originating Traffic
3.2.3.1 Terminating Traffic
3.2.3.2 Originating Traffic
3.2.4
India Terminating and Originating Traffic
3.2.4.1 Terminating Traffic
3.2.4.2 Originating Traffic
3.2.5
Israel Terminating and Originating Traffic
3.2.5.1 Terminating Traffic
3.2.5.2 Originating Traffic
3.2.6
Japan Terminating and Originating Traffic
3.2.6.1 Terminating Traffic
3.2.6.2 Originating Traffic
3.2.7
South Korea Terminating and Originating Traffic
3.2.7.1 Terminating Traffic
3.2.7.2 Originating Traffic
3.3
Oceania Terminating and Originating Traffic
3.3.1
Terminating Traffic
3.3.2
Originating Traffic
3.3.3
Australia Terminating and Originating Traffic
3.3.3.1 Terminating Traffic
3.3.3.2 Originating Traffic
Chapter IV
VoIP International Adoption Trends
4.1
VoIP Overview
4.2
Asia VoIP Traffic
4.2.1
Terminating Traffic
4.2.2
Originating Traffic
4.2.3
China VoIP Traffic
4.2.3.1 Terminating Traffic
4.2.3.2 Originating Traffic
4.2.4
India VoIP Traffic
4.2.4.1 Terminating Traffic
4.2.4.2 Originating Traffic
4.2.5
Israel VoIP Traffic
4.2.5.1 Terminating Traffic
4.2.5.2 Originating Traffic
4.2.6
Japan VoIP Traffic
4.2.6.1 Terminating Traffic
4.2.6.2 Originating Traffic
4.2.7
South Korea VoIP Traffic
4.2.7.1 Terminating Traffic
4.2.7.2 Originating Traffic
4.3
Oceania VoIP Traffic
4.3.1
Terminating Traffic
4.3.2
Originating Traffic
4.3.3
Australia Terminating and Originating Traffic
4.3.3.1 Terminating Traffic
4.3.3.2 Originating Traffic
Chapter V
International VoIP and Revenue Loss
5.1
The Migration of VoIP
5.2
Asia Market Revenues
5.2.1
Sector Performance
5.2.2
Revenue Impact of VoIP
5.2.3
China Market Revenues
5.2.3.1 Sector Performance
5.2.3.2 Revenue Impact of VoIP
5.2.4
India Market Revenues
5.2.4.1 Sector Performance
5.2.4.2 Revenue Impact of VoIP
5.2.5
Israel Market Revenues
5.2.5.1 Sector Performance
5.2.5.2 Revenue Impact of VoIP
5.2.6
Japan Market Revenues
5.2.6.1 Sector Performance
5.2.6.2 Revenue Impact of VoIP
5.2.7
South Korea Market Revenues
5.2.7.1 Sector Performance
5.2.7.2 Revenue Impact of VoIP
5.3
Oceania Market Revenues
5.3.1
Sector Performance
5.3.2
Revenue Impact of VoIP
5.3.3
Australia Market Revenues
5.3.3.1 Sector Performance
5.3.3.2 Revenue Impact of VoIP
Chapter VI
Capital Expenditures and VoIP
6.1
CAPEX Overview
6.2
Asia Investments
6.2.1
China
6.2.2
India
6.2.3 Israel
6.2.4
Japan
6.2.5
South Korea
6.3
Oceania Investments
6.3.1
Australia
Appendix
GLOSSARY
TABLE OF TABLES
Chapter I
I-1 Impacts of VoIP on Worldwide Telecommunications Revenue ($Billions)
I-2 Impacts of VoIP on CAPEX Worldwide ($Billions)
Chapter II
II-1 Asia Wireline Access Lines, Population, and Teledensity, 2002-2011 (Thousands)
II-2 China Wireline Access Lines, 2002-2011 (Thousands)
II-3 India Wireline Access Lines, 2002-2011 (Thousands)
II-4 Israel Wireline Access Lines, 2002-2011 (Thousands)
II-5 Japan Wireline Access Lines, 2002-2011 (Thousands)
II-6 South Korea Wireline Access Lines, 2002-2011 (Thousands)
II-7 Oceania Wireline Access Lines, Population, and Teledensity, 2002-2011 (Thousands)
II-8 Australia Wireline Access Lines, 2002-2011 (Thousands)
II-9 Asia Wireless Subscribers, Population, and Population Percentage, 2002-2011 (Thousands)
II-10 China Wireless Subscribers, 2002-2011 (Thousands)
II-11 India Wireless Subscribers, 2002-2011 (Thousands)
II-12 Israel Wireless Subscribers, 2002-2011 (Thousands)
II-13 Japan Wireless Subscribers, 2002-2011 (Thousands)
II-14 South Korea Wireless Subscribers, 2002-2011 (Thousands)
II-15 Oceania Wireless Subscribers, Population, and Population Percentage, 2002-2011 (Thousands)
II-16 Australia Wireless Subscribers, 2002-2011 (Thousands)
Chapter III
III-1 Asia Inbound MOUs without VoIP (in Millions) 2002-2011
III-2 Asia Outbound MOUs without VoIP (in Millions) 2002-2011
III-3 China Inbound MOUs without VoIP (in Millions) 2002-2011
III-4 China Outbound MOUs without VoIP (in Millions) 2002-2011
III-5 India Inbound MOUs without VoIP (in Millions) 2002-2011
III-6 India Outbound MOUs without VoIP (in Millions) 2002-2011
III-7 Israel Inbound MOUs without VoIP (in Millions) 2002-2011
III-8 Israel Outbound MOUs without VoIP (in Millions) 2002-2011
III-9 Japan Inbound MOUs without VoIP (in Millions) 2002-2011
III-10 Japan Outbound MOUs without VoIP (in Millions) 2002-2011
III-11 South Korea Inbound MOUs without VoIP (in Millions) 2002-2011
III-12 South Korea Outbound MOUs without VoIP (in Millions) 2002-2011
III-13 Oceania Inbound MOUs without VoIP (in Millions) 2002-2011
III-14 Oceania Outbound MOUs without VoIP (in Millions) 2002-2011
III-15 Australia Inbound MOUs without VoIP (in Millions) 2002-2011
III-16 Australia Outbound MOUs without VoIP (in Millions) 2002-2011
Chapter IV
IV-1 Asia Inbound MOUs with VoIP (in Millions) 2002-2011
IV-2 Asia Outbound MOUs with VoIP (in Millions) 2002-2011
IV-3 China Inbound MOUs with VoIP (in Millions) 2002-2011
IV-4 China Outbound MOUs with VoIP (in Millions) 2002-2011
IV-5 India Inbound MOUs with VoIP (in Millions) 2002-2011
IV-6 India Outbound MOUs with VoIP (in Millions) 2002-2011
IV-7 Israel Inbound MOUs with VoIP (in Millions) 2002-2011
IV-8 Israel Outbound MOUs with VoIP (in Millions) 2002-2011
IV-9 Japan Inbound MOUs with VoIP (in Millions) 2002-2011
IV-10 Japan Outbound MOUs with VoIP (in Millions) 2002-2011
IV-11 South Korea Inbound MOUs with VoIP (in Millions) 2002-2011
IV-12 South Korea Outbound MOUs with VoIP (in Millions) 2002-2011
IV-13 Oceania Inbound MOUs with VoIP (in Millions) 2002-2011
IV-14 Oceania Outbound MOUs with VoIP (in Millions) 2002-2011
IV-15 Australia Inbound MOUs with VoIP (in Millions) 2002-2011
IV-16 Australia Outbound MOUs with VoIP (in Millions) 2002-2011
Chapter V
V-1 Asia Telecommunications Revenues & Per Subs Rev 2002-2011
V-2 Asia VoIP Revenue Loss ($Billions) 2002-2011
V-3 China Telecommunications Revenues & Per Subs Rev 2002-2011
V-4 China VoIP Revenue Loss ($Billions) 2002-2011
V-5 India Telecommunications Revenues & Per Subs Rev 2002-2011
V-6 India VoIP Revenue Loss ($Billions) 2002-2011
V-7 Israel Telecommunications Revenues & Per Subs Rev 2002-2011
V-8 Israel Revenue Loss ($Billions) 2002-2011
V-9 Japan Telecommunications Revenues & Per Subs Rev 2002-2011
V-10 Japan VoIP Revenue Loss ($Billions) 2002-2011
V-11 South Korea Telecommunications Revenues & Per Subs Rev 2002-2011
V-12 South Korea VoIP Revenue Loss ($Billions) 2002-2011
V-13 Oceania Telecommunications Revenues & Per Subs Rev 2002-2011
V-14 Oceania VoIP Revenue Loss ($Billions) 2002-2011
V-15 Australia Telecommunications Revenues & Per Subs Rev 2002-2011
V-16 Australia VoIP Revenue Loss ($Billions) 2002-2011
Chapter VI
VI-1 Asia Telecommunications Capital Expenditures 2002-2011
VI-2 China Telecommunications Capital Expenditures 2002-2011
VI-3 India Telecommunications Capital Expenditures 2002-2011
VI-4 Israel Telecommunications Capital Expenditures 2002-2011
VI-5 Japan Telecommunications Capital Expenditures 2002-2011
VI-6 South Korea Telecommunications Capital Expenditures 2002-2011
VI-7 Oceania Telecommunications Capital Expenditures 2002-2011
VI-8 Australia Telecommunications Capital Expenditures 2002-2011
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