Offering wireless Internet telephone, VoIP, and other value-added services is critical in order for wireless network operators to generate revenue and monetize their 4G network investments, according to research from Wireless 20/20. Offering VoIP and other value-added wireless network services as opposed to offering data-only services can significantly increase operators’ average revenue per unit (ARPU) and improve their return on investment (ROI), according to Wireless 20/20’s research.
Wireless network operators’ ROI can be improved further by shifting from in-house hosted VoIP platforms to cloud-based delivery platforms, Wireless 20/20 says in its white paper, “Maximizing Operator Value from VoIP Services.”
Launching a 4G VoIP service will result in a 25%-50% increase in ARPU, a 10%increase in IRR (internal rate of return) and a 5x-10x increase in NPV (net present value) as compared to launching a 4G wireless data service alone. Rolling out a third-party hosted cloud-based VoIP system can add another 5 percentage points to IRR, according to Wireless 20/20’s business case study.
“Operators deploying VoIP over 4G networks are faced with a critical decision as to whether they should build and manage an in-house VoIP platform or partner with a cloud-based, hosted VoIP solution provider,” said Haig Sarkissian, Wireless 20/20 principal consultant.
“We found that although the average VoIP revenue contribution per end-user is largely the same, the investments needed and the ROI vary drastically depending on whether an in-house approach or a hosted solution is used.”
The advantages of going with a third-party hosted cloud solution came not in terms of greater ARPU, which was about the same as that for an in-house platform, but in terms of capital expenditure, operations, maintenance and servicing. In addition to a large capital expenditure, operating costs for an in-house VoIP platform amounted to 30%-40% of total VoIP revenue in addition to call termination charges. That puts a drag on the profitability of a telecompetitor’s VoIP business in terms of organizational support required even for the largest operators, according to the case study results.