Tuesday, June 21, 2011

Data v/s voice

I came across this article today. It shows how voice is contributing smaller and smaller part of overall network traffic. With increasing penetration of IP telephony, this share is further slated to go down. This is particularly true about fixed-line, as the usage of wired telephone has been decreasing over the time.

This trend is increasingly being seen in the wireless networks as well. Data traffic on mobile networks has overtaken voice data way back in December, 2009, way before India and China had 3G networks. So with launch of 3G networks in India and China (which are fastest going markets), today data traffic must be exceeding voice traffic manifold.

Voice calls are increasingly routed through VoIP, with Skype, Gtalk voice chat or Facetime. In my recent trip to Taiwan, I bought 3G card for a week which was mainly used for data usage rather than voice. With availability of such fast network, calling could be done cheaply over VoIP through Skype or any other software, rendering attractive voice plans unnecessary. With this trend continuing, going forward mobile companies better focus on data plans rather than voice.

This is particularly important in India, where cut-throat competition in mobile markets has reduced call rates and ARPUs of mobile companies have plummeted. In such scenario, companies are increasingly focussing on value added services, especially data-based services. With low computer and broadband penetration in India, mobile could be preferred way to access the Internet.

This finally brings me to something which prompted me to write this blog. Strategies of 2 mobile companies, Uninor and MTS, both of which entered India around same time (they got licenses through A. Raja's spectrum allocation). Uninor chose strategy to focus on voice plans and offered attractive voice plans. Their call rates are really cheap and strategy seems to be to get as many customers as possible, irrespective of ARPUs. On the other hand, MTS has focussed on data plans. Their advertisements are about lightening fast Internet through data cards or mobile. Thus, over the long run MTS model seems more successful, especially in India, where people are cost conscious. With faster Internet speeds and cheaper mobile phones with 3G capabilities, people would be shifting to VoIP from voice calls, as calls from say Skype to Skype are free. So one can make unlimited calls with fixed dataplan.

Thus, in my opinion, MTS or any other mobile service provider which focuses on data would be able to sustain competition over longer period rather than someone like Uninor which is focussing only on data.

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