Wed - Asian telecoms increasingly shifts to VoIP post deregulation

VoIP is forcing Asian telcos to look for alternative revenue streams. Deregulation has led to increased competition, resulting in falls in service fees at a time when customer growth is slowing in maturing regional markets.

Unfortunately for telcos, there's a new popular technology that threatens to cut revenues further: cheap internet-based phone systems, such as Skype.

The prospect that phone calls could soon become nearly free with the widespread use of VoIP services poses a danger to Asian telcos that are heavily dependent on voice calls to generate most of their sales and earnings, particularly the old PTT's such as Hong Kong's PCCW, Japan's NTT, Singapore's Singapore Telecom and Australia's Telstra.

Plus, these telcos are forced to cannibalise their voice business as they promote broadband and 3G. And there is a direct correlation between the growth VoIP and these services.

In Japan alone, the number of subscribers to VoIP services has jumped from 3.1M in 2003 to 8.3M in March 2005, compared with 60M regular fixed line subscribers.

In Australia, Telstra's fat margins from fixed-line services, which account for 38.5% of revenue, are under threat as the number of VoIP providers grows to around 40, 15 of which set up in the last 3 months alone.

So, the best line of defence for these fixed-line providers is to invest heavily in bradband and 3G networks and become leaders in the war for always-on IP customers both in the home and on the road. This means that telcos revenues will increasingly come from data and video rather than voice. But the shift is inevitable, so no point dragging feet for too long!