Most executives are familiar with the notion of a “product life cycle.” What might be a more provocative idea is the notion that collectively, the global communications industry might be entering a period where communications itself hits something of a industry life cycle peak.

To be sure, most would agree that voice and messaging revenues now are under pressure, and that broadband services will be the near term growth driver, in both fixed network and mobile network services. And though a public company executive never can say so, there is widespread awareness of the potential danger of declining voice and messaging revenue.

“The telco voice and messaging business is on the verge of going into meltdown,” muses industry consultant Martin Geddes. By that line of thinking, so much revenue and profit is about to be drained away that the replacement revenue streams (based largely on broadband access for the near term) cannot prevent some significant shrinkage of the overall business.

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One doesn’t have to agree with all elements of the analysis to sense the danger. In some markets where the leading edge of the trend seems to be emerging (Europe), there is a palpable sense that voice and messaging revenues are about to become over the top apps, with an implied hit to the dominant provider revenue streams.



“I strongly believe the business model for voice and messaging is about to go into reverse,” says Geddes. “The value is going to drain out of minutes and messages charged to users.”

“Voice and messaging won’t just drop to a price of zero. It will go negative,” Geddes says.

“Whether it is voice, messaging or video, the chain of money from application to transmission to infrastructure is breaking down,” he argues, in large part because “the value creation is outside the network.”

That doesn’t mean people and businesses don’t require network access. The issue is whether they need so much in the way of “services.” That bears directly on the recurring concern about service providers becoming “dumb pipes.”

Many would agree with the fundamental challenges, without necessarily agreeing on the timing and magnitude of the revenue changes. There might be a greater range of opinions about what should be done, and what can be done.

I suspect most of us are more comfortable with a description of the problem than the possible solutions. The decline of legacy revenue sources might occur with equal magnitude in every market, nor so quickly that the newer streams cannot replace what is lost, even as entirely new lines of business are created. What those new sources might be is the big issue at the moment.

The question Geddes poses is more than simply whether key revenue sources have past their peak of demand. That appears to be true. The larger question is whether the business itself is historically wedded to those key sources, or is adaptable enough to thrive with other lead products.

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