Mobile VOIP Demand on the Rise, Report Says

Demand for mobile VOIP capabilities will lead to a $29.57 billion business by 2015, predicts research company Frost & Sullivan, which contends that mobile phone operators that currently levy surcharges or otherwise try to discourage user demand for mobile VOIP need to embrace the technology rather than fight it.

The demand for VOIP on mobile devices is likely to increase rapidly over the next few years, and mobile phone operators can no longer afford to ignore the trend, according to a report from market research company Frost & Sullivan.

About $605.8 million in mobile voice-over-IP revenues were generated in 2008 in North America, Europe, Asia Pacific and Latin America, according to the report, released May 20. Frost & Sullivan expects that number to rise to $29.57 billion by 2015, driven in large part by the rise of flat-rate mobile data pricing, increasing smartphone shipments and the spreading availability of high-speed mobile broadband, according to analyst Saverio Romeo.

The success of Apple's iPhone and related App Store also are fueling the trend, the report said, convincing other smartphone vendors to offer downloadable applications through their stores and allow customers to use third-party VOIP clients over WiFi and cellular broadband networks.

While smaller companies and VOIP vendors, such as Skype, are pushing to link VOIP and mobile devices, larger mobile phone operators are trying to discourage the trend, worried that it will eat into their circuit-switched voice revenue streams.

For this reason, some providers will levy a surcharge on the use of VOIP on mobile devices, the report predicted.

"Despite user demand for cost-effective services, some mobile operators will continue to discourage mobile subscribers from using VOIP over cellular networks and suggest that it will not provide the same quality, efficiency and reliability of services offered by the GSM network," Romeo said in a statement.

Romeo estimated that 60 to 70 percent of the top mobile operators in Europe prohibit or restrict the use of VOIP over their mobile broadband data plans. This doesn't make much sense, he said, especially since many mobile devices that will support HSPA+ (High-Speed Packet Access) and LTE (Long-Term Evolution) will be based on open platforms, and will support SIP (Session Initiation Protocol) for third-party applications.

The report also said mobile phone operators can add various services that pure-play Skype vendors may not be able to, including high-definition voice and integrated voice with context-based data about the user.

The findings in the Frost & Sullivan report are similar to those in a report by Ovum earlier in May, which also concluded that mobile phone operators, rather than fighting the mobile VOIP trend, need to embrace it.