A new study by Wireless 20/20 found that a key means to add value and monetize a 4G network is to deploy VoIP. The study showed that wireless carriers can significantly increase their Average Revenue Per User (ARPU) when offering VoIP, as opposed to offering only voice and data services.
The risk wireless operators face with bundling value-added services like VoIP is the capital expenditures needed to deploy the service on their network. The study noted, in part, “We found that although the average VoIP revenue contribution per end-user is largely the same, the investments needed and the ROI vary drastically…”
The research revealed that ARPU increases by 25% to 50% when launching 4G VoIP, a 5 to 10 times increase in Net Present Value, and a gain of 10% in the Internal Rate of Return. The study also found that the IRR could be increased to about 15% when using cloud-based VoIP services as opposed to deploying VoIP on their own network through capital expenditures.
The study evaluated the differences in cost structure, time to market, back office operations, and investment risk profiles of cloud-based VoIP versus in-house VoIP. It found that the operational costs of an in-house VoIP solution are 30% to 40% of total VoIP revenues, which put a drag on VoIP service profitability.
A cloud-based VoIP solution avoids risks associated with capital and operational expenditures, while still allowing the operator to provide the value-added service. A cloud-based VoIP solution is operated and maintained by a third party which hosts the solution using their own infrastructure.
The study’s author said, “We recommend that 4G operators include value-added VoIP services to their offers in order to monetize the full potential of 4G networks. The analysis published in the white paper demonstrates the viability of a hosted VoIP solution. The positive financial impact of VoIP can be maximized by implementing a cloud-based solution.”
The whitepaper is available for download from Wireless 20/20.