Editor’s Note: Welcome to our weekly Reality Check column. We’ve gathered a group of visionaries and veterans in the mobile industry to give their insights into the marketplace.
Communications service providers, especially wireless network operators, have struggled with poor voice quality for years. Many have compromised voice quality in favor of call volume to conserve precious radio frequency resources for data transmission and other uses. The advent of fourth-generation wireless networks has finally given wireless operators the opportunity to improve voice quality through high definition voice technology. HD voice promises a vibrant and natural reproduction of the human voice, and can deliver audio more efficiently than current technology thanks to the broader capacity of 4G networks. The question is – will customers pay to play?
HD voice technology significantly increases the amount of speech information that can be carried by the phone network. It accomplishes this using high bandwidth codecs, the processors that break down and compress voice into digital signals, on both the transmitting and receiving devices. Codecs used for HD voice are expected to carry at least 50% more bandwidth than current codecs.
Advantages of HD
HD voice has many things going for it. The most obvious benefit is that it offers superior voice quality, especially in mobile devices. Reports from early adopters, such as the France Telecom Orange, indicated a 90% increase in customer satisfaction, a significant reduction in customer turnover, and higher average revenue per user after deploying HD voice.
Less obvious, but just as important are the advantages HD offers to key players in the telecom market. HD voice gives smartphone providers a strong value proposition for premium priced bundles such as unlimited data plans. HD voice will enable large operators such as Verizon Wireless and AT&T Mobility to differentiate their voice over IP offerings by guaranteeing end-to-end quality of service through their networks, and by meeting the aggressive standard for minimizing mouth to ear delays defined by the International Telecommunications Union. HD voice also has a ready market in the fast-growing video teleconferencing market.
HD challenges
Some in the wireless industry remain skeptical of HD voice’s ability to garner a premium price, pointing to over-the-top voice providers like Skype Ltd. and Google Inc.’s Voice service, which can implement HD codecs at their end points and provide HD capability for free. With many wireless operators allowing OTT voice, some question whether HD voice can be monetized at all. However, OTT providers currently cannot guarantee end-to-end quality of service, so an opportunity remains for the larger operators.
Others doubt that price-sensitive consumers would pay more for HD, when today they are willing to accept a lower-quality voice offering.
Finally, there is the question of network requirements. HD voice works only if both end points (transmitting and receiving devices) are HD-enabled. Even if a wireless operator can guarantee end-to-end QoS, they cannot, in many cases, control consumers’ choice of devices.
HD voice poses an interesting dilemma for the wireless operator. With the 4G ecosystem still in its infancy, it is anyone’s guess if consumers will value HD voice enough to pay. Will it be a fleeting differentiator or an enduring requirement? When operators say “it sounds good” they may be talking about just the voice, and not the business.
Sudharsan (Sudhar) Govindarajan is an associate in the Services, Electronics and Software business group at PRTM. Govindarajan is an experienced product development professional with a strong track record of launching several multi-hundred million dollar wireless products. He has also led significant efforts in operations improvement including supply chain and product cost reduction. He has consulted for clients in the communications, wireless, industrial and electronics industries. His areas of expertise include operational strategy, product development, new business development and sales effectiveness. Prior to PRTM Govindarajan worked in various engineering, pre-sales and management roles for Motorola. He has an MBA with honors from The University of Chicago Booth School of Business and a master of science in electrical engineering from the Illinois Institute of Technology. He can be reached at sgovindarajan@prtm.com. You can read more from PRTM’s blog at PRTM.com/blog.
