Speech Technology Magazine

 

Market Spotlight: Telecommunications

Hold the phone! Economic strain and increasing competition force telcos to seek revenue-generation over technology upgrades.
By Leonard Klie - Posted Feb 6, 2009
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Like just about every other industry dealing with the current economic collapse, traditional landline telephone 

carriers are anticipating weaker demand in the coming year, heightened by stiff competition from cable, satellite, wireless, and Voice over Internet Protocol (VoIP) service providers that continue to tout their offerings to cost-conscious consumers as low-cost, fixed-cost alternatives to traditional telephone service.

“Many of the trends that have been affecting the [telecommunications] market are being compounded by the poor economic environment and by the recent financial market collapse,” said Greg Collins, vice president of telecommunications and networking industry analyst firm Dell’Oro Group, in a report released in mid-December. “Wireline service providers continue to be challenged by cable and wireless network operators offering basic voice services. Consequently, the number of fixed-line network connections continues to fall in much of the developed world.” 

It is under this highly competitive and economically challenged backdrop that many carriers have turned their focus away from infrastructure or technology upgrades toward more revenue-generating activities, such as unified communications, integrated messaging, IPTV, and other Internet-based services, including VoIP, according to Alan Weckel, director of Dell’Oro. 

“There’s a definite opportunity to increase revenues by offering applications or functionalities like unified communications and integrated messaging,” he says.

As a result of this trend, functionality that was traditionally confined to core personal branch exchange (PBX) hardware is quickly moving into software applications that can run directly on phones or be networked on enterprise data servers.

“Previously unavailable features, such as corporate directories and Web browsing, are becoming telephony features,” Weckel explains. “At the same time, functionality that used to be tied to a person’s desk phone, such as caller ID or voicemail, is becoming available on cell phones and soft phones.

“Users of cell phones today are expecting a quicker turnaround for applications,” he continues. “They want their desk phone to keep pace with what’s available to them on their cell phones, and vice versa.”

It’s no wonder, then, that the unified communications (UC) market surpassed $3 billion during the third quarter of 2008.  Even less surprising is that the voice application server market—which includes the hardware used to house these applications—grew nearly 30 percent compared to a year ago, according to Dell’Oro. 

But in the current economic climate, carriers and telecommunications systems providers that jumped into the UC pool with both feet are now forced to grapple with new questions: Will businesses rush to deploy IP phones to every employee? How quickly will businesses deploy UC? How extensive will their deployments be? 

And even beyond that, the real question moving forward will surround the issue of control over the UC applications. “If you’re a large enterprise, there are a lot of cost savings by keeping it internal. For carriers, there’s an interest in keeping it because they can charge by the minute,” Weckel says. “It will be interesting to see how far into the enterprise or how far out to the carrier base it eventually goes.”

Weckel also sees a huge opportunity for carriers to make money by offering phone-based vocal translation services, especially as the global economy expands, and to offer downloadable applications that use speech as a command function for phones. In both cases, “carriers are bound to start offering [these services] as they can charge for them,” he says.  

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