Volte Final

Voice and video calling over LTE: Exploring new voice opportunities for operators

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2 2015 Ovum. All rights reserved. www.ovum.com

Executive summary .........................................................................................................................................4

In brief ...........................................................................................................................................................4

Market status ...................................................................................................................................................4

Operators look to new services to drive mobile revenue growth ................................................................5

Market development ........................................................................................................................................5

When to VoLTE ..............................................................................................................................................5

Drivers for VoLTE deployment ................................................................................................................6

VoLTE gaining traction worldwide ..........................................................................................................7

Video (ViLTE) might take longer ..................................................................................................................8

VoLTE to drive RCS growth ...........................................................................................................................8

The VoWi-Fi factor .........................................................................................................................................8

VoLTE going into the mainstream ...................................................................................................................9

Operators progressing towards full VoLTE ..................................................................................................9

Commercial considerations for VoLTE implementation ..............................................................................9

Operators pricing expectations ....................................................................................................................9

VoLTE across borders....................................................................................................................................10

Technical and commercial considerations .................................................................................................10

Conclusions and recommendations ..............................................................................................................13

Contents

Copyright Ovum 2015. All rights reserved.

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About the author

Nishi Verma Nangia

Nishi Nangia is a Senior Analyst with Ovum. She is a part of Service Providers & Markets team where she is responsible for topical analysis of service providers strategies covering a range of topics including global mobile roaming, mobile data pricing and service innovation, prepaid strategies, and loyalty.

Nishi has eight years experience in providing strategic insights to global telecoms and consulting firms. Prior to joining Informa, she was Handsets Sector Lead at GfK in the UK, where she was responsible for advisory research and forecasting of the global smartphone market. Before that, she worked as a Senior Analyst at Frost & Sullivan, covering the mobile service landscape in India, and as Research Manager at Evalueserve in India and Chile, where she was responsible for bespoke research on mobile markets in Europe and the Americas.

Nishi holds a bachelors degree in business and finance from India.


Ovum has conducted extensive research, which included an industry survey with mobile operators and MVNOs around their plans and expectations on VoLTE and ViLTE. There were a total of 108 respondents to the survey, representing operators from around the world. Asia Pacific was particularly a strong region in terms of operator responses, because of the early success of VoLTE there. In this whitepaper, Ovum presents its survey findings on VoLTE market opportunity for operators and also highlights the inherent challenges operators will face as they migrate towards VoLTE.

Market statusOver the last few years, LTE deployments have accelerated

worldwide as operators look to increase network capacity and offer higher-speed data services to their customers. LTE is the most rapidly deployed wireless technology today with 313 live LTE networks

worldwide at the end of 2014. According to Ovums research, there were another 143 LTE networks planned, in deployment, or in a pre-commercial phase at the end of 2014.

0

0.5

1.0

1.5

2.0

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2019201820172016201520142013

Middle East AfricaLatin America Western Europe Eastern Europe Asia & OceaniaNorth America

Con

nect

ions

(bill

ions

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Figure 1: LTE connections by region, 201319

Source: Ovum

Executive summaryIn briefOperators are increasingly looking towards new services to drive mobile revenue growth. Voice will continue to remain relevant, but voice services, evolved into a broader context to include multimedia features, are expected to gain momentum and enable operators to compete against the growing burden of OTT voice services. We already see Voice over LTE (VoLTE) services gaining fast traction, with a slew of operators announcing VoLTE launches or trialing VoLTE for their domestic markets. It will be equally important for operators to expand VoLTE services across borders, in order to extend the same good quality of experience to their travelling customers. Many operators are likely to implement international VoLTE within next 6-12 months.

1. Operators need to develop new voice opportunities and VoLTE will be a crucial step forward, in order to offer an improved end-user experience. VoLTE, combined with rich communications suite (RCS), has the potential to bring new opportunities for operators and to gain innovation leadership. This will be crucial to compete with the OTT players and other network providers. In addition, VoLTE will bring spectrum efficiencies and opex savings for operators through network consolidation.

2. The VoLTE ecosystem is getting there, with more than 80 operators in different stages of VoLTE deployment and many others trialing the technology worldwide. Asia Pacific is one of the leading regions for VoLTE deployment with operators in South Korea, Japan and Hong Kong having launched commercial VoLTE services. Operators in the US are a close second with commercial VoLTE services already deployed across many markets.

3. As operators launch VoLTE services across their domestic markets, they will soon need to start thinking about international VoLTE interconnection and roaming for international service continuity. International VoLTE could be a significant opportunity for operators to gain the first-mover advantage; however, there remain the inherent challenges of interworking and interoperability. Some of the recent trials showcasing cross-border VoLTE implementations, such as China Mobile and KPN Mobile demonstrating IMS-based VoLTE roaming supported by iBasis IPX, pave the way for VoLTE interoperability and commercial roaming deployments.

4. For VoLTE roaming, operators will need to remain flexible between home routing and local routing solutions. Local routing can be a powerful solution for operators to offer an improved quality of service to roaming customers by serving them through local operators. As local routing means that the VoLTE voice and Video over LTE (ViLTE) calls will not need to trombone back to the home network, it will offer a better quality of experience at a reduced cost.


This rapid pace of LTE deployments is driving an increasing number of LTE connections worldwide. According to Ovum research, there were 386 million LTE connections in total at the end of 2014, and this number is forecasted to grow at a compound annual growth rate (CAGR) of 43% between 2014 and 2019 to reach 2.3 billion (see Figure 1).

The growth of LTE subscriptions is fuelling data traffic growth, with audio and video streaming and social networking services driving data usage. Mobile voice, on the other hand, is witnessing a decline as there is a growing shift of subscribers away from traditional voice services towards data-based voice applications, such as over-the-top (OTT) Skype and Viber applications, and towards messaging services in general. Even though mobile voice still remains the biggest contributor to overall mobile revenue, its share is rapidly plummeting (see Figure 2).

As operators traditional voice businesses are now being squeezed, they need to evolve voice services to compete against the growing burden of OTT voice services. Also, operators need to evaluate the costs of running circuit-switched voice networks while they develop new voice opportunities for the future. Some of the operators have already announced their plans to close down 2G networks, including Telstra in Australia and AT&T (both expected to shut down their 2G networks by end of 2016) and SingTel, as they migrate their customers towards high-speed LTE networks and deploy VoLTE services.

Operators look to new services to drive mobile revenue growthOvums survey results show that audio- and video-streaming services are expected to drive maximum

mobile revenue growth over the next few years, voted by a total of 57% respondents as the top 1, top 2, or top 3 services. This includes 36% of the respondents who voted it as the top 1 service (see Figure 3). Social networking services are expected to stimulate mobile revenue growth as well.

Voice services as we know today, evolved to rich voice, (or VoLTE) are expected to gain momentum, voted by total of 38% of the respondents as among the top services to drive growth. Rich Communications Suite (RCS), which combines voice

services with presence and location information, instant messaging, live video, and file sharing across devices and networks, is voted slightly lower, by total of 30% of the respondents, perhaps due to the complexities in technology and standardization.

Market developmentWhen to VoLTEThe push towards VoLTE is expanding as it is expected to bring several sizable benefits, including an improved end-user experience and spectral efficiency gains. But, of equal importance, it can enable operators to develop new differentiated service

Top 1 Top 2 Top 3

0 10 20 30 40 50 60

Any other

Traditional voice and SMS

Video (ViLTE)

Rich Communications Suite (RCS)

Mobile money/mobile wallet

Rich voice (VoLTE)

M2M

Social networking applications

Audio and video streaming

Respondents (%)

1 32

7

5

5

6

13 8 17

11 15 20

16 21 14

36 15 6

16 9

8 17

10 8

6 6

Figure 3: Which services are expected to drive mobile network revenue growth over the next five years?

Source: Ovum

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40

60

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2019201820172016201520142013

38 42 45 48 50 53 55

62 58 55 52 50 47 45

Data Voice

Sha

re (%

)

Figure 2: Global mobile revenue, voice and data market shares, 201319

Source: Ovum


propositions. Some operators, particularly in Japan, South Korea, and the US, are embracing VoLTE and pushing towards full VoLTE deployment in order to differentiate their services and to compete against OTT providers and other network operators.

A few operators on the other hand have concluded that there is no business case for immediate VoLTE deployment and are regarding VoLTE as a mid-to-long-term migration. The reason is simple: Full VoLTE requires expensive and complex IMS

deployments, while the impression is that VoLTE by itself does not promise any immediate incremental revenue for operators.

As a result, some of these operators are planning to introduce VoLTE with other services, such as RCS, to provide an overall enhanced voice and data experience to their customers. While others might prolong their use of circuit-switched fallback (CSFB) as an interim solution to route voice calls on their 2G/3G networks rather than the LTE networks, until they feel the

timing is right for VoLTE. However, these operators should seriously consider the advantages that VoLTE can bring versus the risk of waiting too long to deploy it. The longer they wait, the bigger the impact on their competitive position, and the more difficult it will be to recapture market share.

Ovums recent survey of mobile operators and MVNOs shows that 16% of respondents have already launched VoLTE services with almost an additional third of the respondents planning to do so within a year (see Figure 4). Another third of respondents are planning to launch VoLTE services in the next one-to-two years. However, 19% of respondents say that VoLTE will take longer or they have no plans for it as yet. There remains a dichotomy between developed and emerging markets over the commercial deployment of VoLTE. Operators in mature LTE markets are progressing fast towards LTE while operators in emerging markets are taking a slightly cautious approach towards it, focusing first on LTE coverage and overall data adoption among customers.

Drivers for VoLTE deploymentVoLTE is attractive to operators for many reasons. One of the primary

Alreadydeployed

VoLT

E

In


advantages is that it will improve the end user experience through better voice quality and faster call set-up times. SK Telecom, for example, says that VoLTE offers better voice quality and has a lower call-setup time: "0.252.5 seconds compared with five seconds on 3G, as reported by the CTO during LTE event in 2013. The operator is promoting VoLTE as a way to boost customer loyalty. This is validated in our survey as 45% of the survey respondents agree that improved customer experience is an extremely important driver for them to deploy VoLTE to compete against OTT voice offerings (see Figure 5); another 36% think it is an important driver.

VoLTEs simultaneous use of voice and video paves the way for new opportunities. 30% of survey respondents consider this as an extremely important driver for VoLTE and another 36% consider it as important. For operators, the potential to combine voice with video and multimedia services over

LTE is significant. However, it is not clear yet whether operators can monetize these opportunities. This is partly because OTT players, such as Facebook and WhatsApp, already offer these services and end users are happy with them so far. And traditionally, as we know it, subscribers by and large have been reluctant to pay for new services, but rather expect them to be bundled into their existing plans. But this will still be crucial for operators, to develop new service opportunities and create user value, in order to compete against OTT players.

Another important consideration for operators is the spectral efficiency gains that VoLTE can bring for them. VoLTE can allow operators to deliver voice services far more efficiently, in terms of spectrum usage. VoLTE can optimize spectral efficiency of mobile voice, and operators can use the spectrum savings for data services, perhaps by re-farming their 2G/3G spectrum for LTE data services. A total of 57% of the survey

respondents consider it an extremely important or an important driver for VoLTE.

VoLTE gaining traction worldwideIn terms of VoLTE launches, most of the mature LTE markets are fast progressing towards VoLTE. Worldwide, more than 80 operators across 42 countries are in different stages of VoLTE deployment with many others trialing the technology. South Korea is the worlds most advanced market with all its operators offering VoLTE-based services, followed by the US (see Table 1).

According to Ovum analysis, 2015 is expected to witness a strong trajectory for VoLTE launches. The following operators have already announced their commitment to launch commercial VoLTE services in 2015: Taiwan Mobile, SFR France, EE UK, T-Mobile in Germany and in Czech Republic, Vodafone in Germany, Spain and Netherlands, Telefonica in Spain and Germany.

Table 1: Operators VoLTE launches, by region, 4Q14

Region Country Operator VoLTE Launch LTE Launch

Americas US AT&T May 2014 September 2011

US T-Mobile USA May 2014 March 2013

US Verizon September 2014 December 2010

Asia Pacific South Korea SK Telecom August 2012 July 2011

South Korea LGU+ August 2012 July 2011

South Korea KT October 2012 January 2012

Hong Kong CSL May 2014 August 2011

Hong Kong Three May 2014 May 2012

Japan NTT DoCoMo May 2014 December 2010

Singapore SingTel May 2014 June 2012

Singapore StarHub June 2014 September 2012

Japan KDDI December 2014 September 2012

Europe Denmark TDC November 2014 October 2011

Romania Vodafone November 2014 November 2012

Middle East UAE Du August 2014 June 2012

Source: Ovum


Video (ViLTE) might take longer High-speed LTE networks are leading to a burgeoning demand for video calling services. Almost a quarter of the survey respondents voted ViLTE as their top 1, top 2, or top 3 service to drive mobile revenue growth over the next few years (see Figure 3). This is an opportunity for operators to offer a high-quality voice, video, and rich multimedia experience to end users, in order to compete against the likes of Skype and Apple FaceTime. In addition to the quality of experience, ViLTE will allow operators to provide security and flexibility that the OTT video apps cannot guarantee. For example, SK Telecom offers its customers attractive group audio and video calling and other multimedia services over its LTE network. The key strategy for SK Telecom, as stated by one of the senior managers, is to keep its users hooked on to its network for a differentiated service and carrier-grade QoS versus the best-effort approach of OTT players.

Operators are optimistic about ViLTE as almost half of the survey respondents say they plan to launch ViLTE within two years while 5% of the respondents have launched it already (see Figure 4). However, for ViLTE to become a mass-market phenomenon, it will require full service standardization and operators

will need to be more innovative in developing differentiated voice and service propositions. Also, operators will need to clearly define commercial models for ViLTE, to be able to generate incremental revenues through it.

VoLTE to drive RCS growthThe survey results indicate that, while the momentum behind VoLTE is positive, the same is not as true for RCS: Only 9% of the respondents have launched it (see Figure 4). Previously, operators have been slightly disappointed with the uptake of GSMAs RCS initiative (called Joyn), since its introduction in 2012. However, today, there are around 41 operators across 32 countries with live RCS implementations, and this is expected to more than double in a years time with a total of 87 operators now committed to launch RCS by the end of 2015.

RCS combined with VoLTE can bring new opportunities for operators and enable them to compete against OTT players. It was rated by a total of 61% respondents as the top driver for launching RCS, with 41% rating it as the number one driver and the other 20% rating it as the number two driver (see Figure 6). The survey respondents also believe that RCS is important to enhance the overall

customer experience voted by a total of 47% of the respondents.

RCS calls for operators to invest in developing new IMS-enabled services, such as Presence and Geolocation Exchange. To support these new services, operators will need to upgrade their OSS and BSS with no guarantee as yet that customers will actually use those services. A worrying 55% of the survey respondents have only long-term plans or no plans at all for launching RCS (see Figure 4). According to Ovum analysis, a mature device ecosystem and revenue monetization opportunity through APIs, advertising, etc. can help RCS gain faster momentum. For 2015, Verizon, AT&T, China Mobile, and a few other operators are scheduled to launch RCS-based messaging and voice services, combining them with their VoLTE services. This is expected to be a bellwether for the future of RCS as Ovum expects 2015 to be the final make or break year for RCS.

The VoWi-Fi factorOvums survey results show that operators are positive about VoWiFi services: 44% of the respondents plan to launch it while 5% say they have launched it already (see Figure 7). One of the key reasons for operators to consider VoWiFi is to lower their

Respondents (%)0 5 10 15 20 25 30 35 40 45

Any other

As a standalone service, to compete againstOTT players

Competition from other operators

Network convergence and all-IP transformation

To enhance the customer experience with richcommunication services

Combined with VoLTE, to compete againstOTT players

Top 2Top 1

03

5

4120

1136

2023

141414

Figure 6: What do you think are the top two drivers for operators launching RCS?

Source: Ovum


capital expenditure on VoLTE network rollout and use VoWiFi for in-building coverage to improve customers overall voice experience. Some operators have already announced their plans to launch VoWiFi services; for example T-Mobile and Sprint in the US and EE and 3 in the UK.

However, 42% of survey respondents say they are undecided about VoWiFi. The operators do see the benefit of voice handover between LTE and Wi-Fi networks. However, the service quality remains a question and many operators are taking a cautious approach towards VoWiFi. For example, AT&T says that VoWiFi will simply complement the existing 3G and VoLTE network and it is in no rush to launch it as an additional calling option. In addition, the device

support for VoWiFi is still quite limited; although it might be kicked off soon by Apples support for VoWiFi in iPhone 6.

VoLTE going into the mainstreamVoLTE is now gaining momentum and more operators are announcing plans to launch VoLTE services, including EE, TDC Denmark, Bouygues Telecom, Deutsche Telekom, Telstra, and Softbank Mobile. According to Ovum analysis, 2015 is expected to witness a strong trajectory for VoLTE launches worldwide. The survey results show that 64% of the respondents plan to launch VoLTE services over the next two years and 16% have launched it already (see Figure 4). But the launch is not just

the question of operators technical readiness; it also reflects their commercial priorities.

Operators progressing towards full VoLTEAs operators recognize the benefits of VoLTE, they are adopting interim solutions for 2G/3G voice and VoLTE, while evaluating the costs and infrastructure requirements for full IMS-based VoLTE. Table 2 highlights the different interim approaches to migrating to full LTE voice and data.

Commercial considerations for VoLTE implementationThe survey respondents were asked to evaluate a number of aspects for VoLTE implementation. Providing the highest level of QoS was rated by 83% as important, with 41% seeing it as extremely important (see Figure 8): QoS is important because VoLTE enables operators to offer high-quality differentiated HD-voice experience to their customers with lower call set-up times. Maintaining current voice capabilities also scored high among respondents with 33% scoring it as extremely important and another 33% as important. This is a key differentiation as VoLTE can support existing call functions, such as emergency calls, compared with the OTT propositions.

Another important aspect is the flexibility to adapt to changes in charging models with 31% of the respondents rating it as extremely important and an equal percentage rating it as important.

Operators pricing expectationsThe majority of VoLTE operators are accounting for VoLTE within their customers voice allowances without any premium over basic 2G/3G voice. The survey findings show that 72%

Table 2: Interim approaches for operators to migrate to full VoLTE

Approach Description Pros Cons

Simultaneous Voice and LTE Data (SVLTE)

Mainly for CDMA operators Two radios to run LTE data service and circuit-switched voice service over a CDMA2000 network

Ensures 2G/3G voice benefits along with simultaneous voice and data sessions

Potentially negative impact on device battery life

Circuit-Switched Fallback (CSFB)

Using 2G/3G networks for voice LTE user switched back to 2G/3G radio network for making or receiving calls and is reconnected with the LTE network after the call

Ensures 2G/3G voice benefits

Call set-up time is high and it does not offer any network efficiencies

Single Radio Voice Call Continuity (SRVCC)

For spotty LTE coverage A single radio in the device, uses VoLTE for calls in LTE coverage, and is switched back to 2G/3G voice when outside LTE coverage

Maintaining call continuity for VoLTE and 2G/3G voice; offers seamless handover with single device radio for improved battery life over CSFB

Call quality could suffer when switched back to 2G/3G; current limited device availability

Source: Ovum

Undecided42%

No9%

Yes44%

Already deployed5%

Figure 7: Do you plan to launch VoWiFi service for your customers?

Source: Ovum


of operators expect VoLTE voice to be charged on per-minute basis to end users (see Figure 9). However, as customers are now becoming accustomed to unlimited voice plans, the per-minute charging might become tricky, indicating a possible shift in how operators charge for voice itself.

On the other hand, the operators opinion seems to be mixed on VoLTE video (ViLTE) pricing: 44% respondents expect it to be charged the same as VoLTE voice (i.e. on per-minute basis), while 56% expect capacity-based pricing for video calls.

For VoLTE pricing, one of the key challenges for operators is undefined VoLTE interconnection regimes. This will be crucial and operators will need to remain flexible and experiment with different charging models in order to succeed with their VoLTE ambitions.

VoLTE across bordersAs operators are currently launching VoLTE services for their domestic customers, they will soon need to start thinking about international VoLTE interconnection and roaming for international service continuity. The Ovum survey data indicates that almost half of the respondents

intend to launch VoLTE for international interconnect and for roaming within 6 to 12 months of the domestic VoLTE launch. And more than a third of the respondents plan to launch VoLTE for international interconnect within the same time.

International VoLTE seems to be a lower priority for the majority of operators at the moment. The reason is simple: operators would want to start small and gain success in their domestic markets first, then move on to regional and global markets. Once operators start achieving momentum on their domestic VoLTE, and by the time the complexities of interoperability, handset availability and commercial models are resolved, international VoLTE will become a higher priority for operators. However, there could be a significant

opportunity for operators that implement international VoLTE sooner rather than later, in order to gain the first-mover advantage.

For a fair majority of the respondents, international VoLTE interconnection and roaming could take anywhere between six months to up to two years. Or it might even take longer than two years for a small number of respondents (11% for VoLTE for roaming and 8% for VoLTE for international interconnect).

Technical and commercial considerationsAs with any new technology, VoLTE brings potential teething problems. Ovums survey results indicate that operators consider interworking and interoperability to be a major challenge for VoLTE implementation, voted by

VoLTE voice pricing VoLTE video pricing

56%

Per minute Capacity based

44%28%

72%

Figure 9: What is your expectation for LTE voice and video calling pricing models for end users?

Source: Ovum

Respondents (%)0 20 40 60 80 100

Time to market

Minimizing complexity

Protecting roaming revenue streams

Flexibility to adapt to market changes in charging models

Maintaining current voice capabilities (e.g. emergency calls)

Providing the highest level of QoS

2 3 4 5= Unimportant1= Extremely important

519 64525

514 94725

927 191728

325 93131

520 93333

5134241

Figure 8: For VoLTE implementation, which of the following aspects is most important to you?

Source: Ovum


72% respondents as a challenge for domestic VoLTE while a whopping 88% vote it as a challenge for international VoLTE (see Figure 11).

It is only recently that operators have started to talk about VoLTE interoperability. For example, in June 2014, China Mobile and KT Corp demonstrated the first cross-border VoLTE trial which was soon followed by an IMS Local Breakout with home routing trial for VoLTE roaming calls between China Mobile and KPN Mobile in October 2014 (using iBasis and China Mobile International as IPX Providers). In November 2014, AT&T and Verizon announced their plans to work towards achieving VoLTE interoperability for their domestic customers. While these

technology trials and operator agreements pave the way for VoLTE interoperability and commercial roaming deployments, it might take some time for operators to resolve the interoperability issues. Seamless interworking/interoperability will be crucial for transnational VoLTE success, as previously experienced with the adoption cycle of SMS.

Similar to LTE roaming, VoLTE roaming standards provide home and local routing options for operators to consider. Local routing is the mechanism where VoLTE traffic does not travel back to the home network but is handled by the local operator in the visited market instead. Local routing could be a powerful solution for operators to offer an improved

roaming quality of service to their outbound roamers, by serving them through the local operators. This becomes crucial for delay-sensitive applications such as LTE voice and video calls in roaming. As the calls will not need to trombone back to the home network (as in the case of home routing), a local routing solution can offer better call quality and experience, at reduced costs.

While 12% of the survey respondents said that they plan to use local routing for VoLTE roaming and 22% choose home routing, two-thirds said they plan to use both local and home routing for VoLTE roaming (see Figure 12). It gives operators more flexibility to be able to choose between home or local routing depending on their customers needs

14%5% 22%28% 8%11%

16%27%19%14%19%

Immediately Within 6 months 6-12 months 12-24 months Longer than 24 months Not in our current plans

VoLTE for roaming VoLTE for international interconnect

19%

Figure 10: How soon after you have deployed VoLTE in your domestic market will you support it for international interconnect and roaming?

Source: Ovum

Domestic VoLTE International VoLTE

72

53

56

3844

8

34

3922

23

2

53

69

88

Respondents (%)0 20 40 60 80 100

Any other

IMS platform implementation

Reach/coverage

Additional billing and charging complexities between operators

Commercial models not well-defined yet

Roaming complexities

Interworking/ interoperability issues between operators

Figure 11: What do you think are the major challenges for domestic and international VoLTE implementation?

Source: Ovum


and SLAs, their roaming partners technical readiness, or simply the service/application requirement.

In terms of the locally routed roaming traffic, almost half of the survey respondents say that between 10% and 20% of their VoLTE roaming traffic would benefit from being locally routed (see Figure 13). Another 14% of respondents say that it will be more than 20%. This is very positive as it appears that operators do recognize the benefits they can realize through local routing. However, 38% say local routing would benefit less than 10% of their VoLTE roaming traffic.

Another key challenge for VoLTE is commercial models (see Figure 11). Commercial models need to be standardized as 56% of the survey respondents rate it as a challenge for domestic VoLTE and almost an equal 53% for international VoLTE. Policy, billing, and charging issues need to be resolved as well, for VoLTE to gain traction. LTE reach and coverage also pose a barrier for both domestic and international VoLTE implementation. It will take some years to have ubiquitous national and global LTE coverage, while there remain a few other challenges for operators to deal with for VoLTE.

Under local routing, loss of subscriber control and unpredictable QoS from foreign networks are some of the key concerns for operators. In addition, unclear wholesale settlement between home and visited operators is expected to be a big challenge: 34% of the respondents rate it as a high concern while another 36% rate it as their number two concern (see Figure 14). Although many operators do plan to charge VoLTE on retail per-minute basis, some operators are open to different

charging mechanisms and flexibility. Wholesale agreements need more standardization which the industry will need to work through.

One of the other major concerns for operators under the local routing model is the cost of implementing it, voted by 23% of the respondents

as a high concern while another 44% rate it as their number two concern. Weighing the advantages of local routing with the cost of implementation will be crucial for operators to make a sound decision. Vendors will need to come up with innovative solutions, to minimize these costs.

Both local andhome routing

66%

Home routing22%

Local routing12%

Figure 12: Do you plan to use a local routing (by visited network) or home routing for VoLTE roaming?

Source: Ovum

Less than 10% 38%

Between 10% and 20% 48%

More than 20% 14%

Figure 13: From a quality standpoint, what percentage of your VoLTE roamers traffic do you think would benefit from being locally routed?

Source: Ovum

Respondents (%)0 20 40 60 80 100

Loss of subscriber control to foreign networks

Unpredictable QoS from foreign networks

Unclear wholesale settlement between home

and visited operators

Implementation costs for local routing

2

45 38 5 8 5

42 38 11 8 2

34 36 20 3 6

23 44 23 8 2

3 4 5 = Lowest concern1 = Highest concern

Figure 14: What do you think are the key concerns for operators under the local routing model?

Source: Ovum


Conclusions and recommendationsIn most of the mature LTE markets, mobile operators are fast embracing VoLTE for all the diverse benefits it brings, including spectral efficiency gains and cost savings from network consolidation. These benefits, combined with the potential to develop new service opportunities, provide a solid foundation to operators, even in emerging markets, to seriously consider VoLTE. Overall, there is growing momentum for VoLTE, as operators weigh the likely gains against the technical and commercial challenges.

Operators should consider launching VoLTE sooner rather than later. VoLTE is not only enhanced high-definition voice but is much more in terms of new multimedia experience for customers. And for all the pressure that OTT players are putting on operators voice businesses, VoLTE is a logical step for operators, to be able to develop new differentiated service propositions. Full VoLTE does require careful consideration with complex IMS deployments. However, the risk of waiting too long may prove more costly for operators and rather benefit OTT providers.

Operators should combine VoLTE with RCS to make the most of the IMS infrastructure investments. VoLTE is an opportunity for operators to capitalize on RCS voice and video capabilities, both sharing same IMS investment. As VoLTE gains more traction and drives operators to invest in IMS deployments, operators should exploit RCS capabilities to get more worth from their IMS investments.

Operators should evaluate new pricing models but focus on service differentiation more than price. VoLTE and RCS, as part of broader strategy to enhance customers service experience, can allow operators to gain competitive edge in the market. Operators should focus on providing compelling services and differentiated experiences in a way that customers are happy to pay a premium. However, operators should remain flexible with pricing and carefully evaluate different charging models, in order to stimulate VoLTE usage.

Operators should prepare their networks for a first-mover advantage for International VoLTE. As operators launch VoLTE services in their domestic markets, they should prepare their networks to extend the same user experience to their roaming customers as well. Recognizing the benefits of local routing for VoLTE roamers, operators will need a flexible roaming solution to realize those benefits. International VoLTE could be a significant opportunity for operators, to provide strong service and quality differentiation to end users.

Operators should partner with right technology vendors that can support them in their migration towards VoLTE. Technology vendors can help operators overcome the technical challenges associated with VoLTE, so they can focus on commercial strategies and service development. This will be crucial for operators as the vendors have the right expertise and skills to manage the coverage, signaling and interworking complexities, for smoother domestic and international VoLTE rollouts. And it will allow operators to strengthen their technology position.

ABOUT OVUMOvum is a leading global technology research and advisory firm. Through its 180 analysts worldwide it offers expert analysis and strategic insight across the IT, telecoms, and media industries. Founded in 1985, Ovum has one of the most experienced analyst teams in the industry and is a respected source of guidance for technology business leaders, CIOs, vendors, service providers, and regulators looking for comprehensive, accurate and insightful market data, research and consulting. With 23 offices across six continents, Ovum offers a truly global perspective on technology and media markets and provides thousands of clients with insight including workflow tools, forecasts, surveys, market assessments, technology audits and opinion. In 2012, Ovum was jointly named Global Analyst Firm of the Year by the IIAR.

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ABOUT IBASISA wholly-owned KPN company, iBasis is a leading international voice carrier and provider of value-added services for mobile operators. The company offers a comprehensive portfolio of voice termination and data services, including messaging, signaling and roaming, for many of the worlds largest fixed and mobile operators, as well as OTT service providers.

iBasis International LTE Services SolutioniBasis offers mobile operators the shortest route to securing LTE revenues and achieving a global LTE footprint. The iBasis LTE services use the iBasis multiservice IPX for guaranteed and differentiated quality for all services. A single point of access provides operators entry to iBasis 4G (LTE) signaling network, with Diameter Routing Agents on all continents for maximum service quality and more than 175 LTE destinations in more than 80 countries. iBasis LTE solution includes Diameter signaling, data roaming and VoLTE interworking and roaming, combined with the InVision advanced monitoring, troubleshooting and reporting tool. iBasis also offers a robust trial environment for testing LTE signaling and data roaming and VoLTE scenarios.

Find out more about iBasis at www.ibasis.com

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