Euro Telecom: Voice for free in Europe?

Voice services earn telecommunications providers the bulk of their income in Europe today, but that should change as users begin to expect free voice telecommunications in exchange for the purchase of other services, according to several speakers here at IDC's European Telecoms Forum.

In the future, telecom companies will need to make a profit from innovative services only after they have hooked customers with free voice telecommunications -- a trend that some say is picking up speed in the US.

Today, most of telecom revenue in Europe comes from voice traffic, although data traffic -- but not its associated revenue -- is growing quickly.

"From a traffic perspective, data is growing at a phenomenal rate, but IP (Internet Protocol) and data as a revenue source remain a niche market in Europe," said Mark Winther, group vice president of worldwide telecommunications at IDC in Framingham, Massachusetts. "About 84 per cent of the market (revenue) is voice."

Voice may be today's "killer application" for the telecom market, as Winther called it, but today's primary revenue generator may be tomorrow's giveaway in Europe, some predicted.

"By 2005 only 3 to 4 per cent of telecom company revenues will be based on voice communication," predicted Sebastiano Tevarotto, worldwide marketing and strategic relationship manager, based in HP's Cupertino, California, offices. "The vast majority of revenue will be from distributing services."

The practice in Europe will follow a trend emerging in the US, where telecom companies offer voice services for free to attract customers but then make their profits by offering other telecom services sold to those voice customers, Tevarotto said.

Also, a generational preference will further create a drop in the overall importance of voice and a rise in the importance of data, it was predicted.

"The killer application today is voice, but with new technologies coming, such as UMTS (Universal Mobile Telecommunications System), do we really need voice technology to do services?" asked Lucio Rispo, director of the telecom, transports, energy, public sector at Sema Group. "When our kids will be customers, they are not going to call -- they will surf."

The growth in size and importance of data traffic will also have a strong impact on underlying voice technologies, predicted Brian Catt , EMEA marketing director at Infonet Services. Telecom companies will be forced to adopt packet switching more quickly than they would otherwise," Catt said.

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