The premium for using wireless voice services instead of wireline services is expected to drop from 100 percent or double the price last year to 42 percent by 2007, driving further wireline substitution in the voice market, according to a report from Frost & Sullivan.
The report added that in 2007, 49 percent of revenues are expected to come from mobile networks compared with 38 percent in 2000, with the total value of substituted minutes increasing from about $1.6 billion in 2003 to $2.4 billion in 2007.
Frost & Sullivan research analyst Jan ten Sythoff noted that intensifying competition from new entrants and mobile virtual network operators is exerting further downward pressure on mobile minute prices, and service providers need to take adequate precautions against price erosion.
“The subscriber saturation in the mobile voice market is compelling service providers to follow aggressive price policies that would allow them to shift a significant portion of the local and international fixed minutes onto their networks,” Sythoff said.
While mobile services are expected to continue to take a bite out of fixed services on the consumer side, fixed-line providers are expected to see less competitive pressure for business lines, which are forecast to decline by just more than 2 percent between 2003 and 2007 as opposed to the 5-percent projection for the consumer segment. Frost & Sullivan explained that business customers prefer free and low-cost international rates that fixed operators usually provide for up to five-times less than mobile operators.
“Rather than competing and eating into each other’s shares, a synergy between fixed and mobile markets seems to offer a perfect fit,” Sythoff added. “There is a lot of opportunity for video calls on fixed lines, as well as the convergence of other services such as sending an SMS from mobile to a fixed line and vice versa.”
