Psst! Voice Is Still The Killer App
By Mike Masnick, Tue Mar 08 02:30:00 GMT 2005

While the focus remains almost entirely on data, some people may be forgetting that voice is still the killer app for mobile communication -- and there's plenty of room to grow.

How you define your market often can determine whether or not your company succeeds. A few years ago, mobile operators clearly placed themselves in the mobile voice space. Mobile data seemed like a side issue that few paid serious attention to. They all knew it was coming, but it was a separate division that was off working on data services that might help complement the voice business at some point down the road.

Then, a few things happened. First, the ongoing infatuation with ARPU meant that operators had to look for more ways to pump up the revenue per user -- and adding on data services seemed like a good idea. Second, SMS became a huge success, surprising just about everyone who never expected it to be useful for very much at all. With the success of SMS, operators figured that if simple text messages could be a big moneymaker, much fancier data services could only be an even bigger moneymaker. Finally, and most importantly, operators paid out ridiculous sums of money for various 3G licenses, mostly for capacity issues, but also with an eye towards eventually offering mobile data. In doing the buyers-remorse-math following the various spectrum auctions, it didn't take operators long to realize that just offering voice wasn't going to bring back much of an ROI -- leading (again) to that infatuation with ARPU.

Suddenly, data was everything. If you're following the industry these days, you'd be forgiven for thinking that the wireless world was all about data with just a little bit of voice, rather than recognizing that voice is still a major cash cow for operators. While some have recognized this and suggested that enhanced voice services would be a smart way to go, there may be an even simpler solution: remembering that mobile voice still competes with fixed-line voice.

As Om Malik points out, there's still a tremendous opportunity in the voice space for mobile operators to move customers from fixed-line voice to mobile, but it's going to take a bit of a fight. Fixed-line telcos are finally starting to realize the threat of mobile voice (something they should have recognized ages ago), and Om points out that they can fight back with cheap, innovative VoIP packages, that lock in customers to "something new" that doesn't come from the cellular world. Of course, the mobile providers could do the same thing, but instead, many are off chasing fantasies, while the opportunity to grab marketshare from fixed-line telcos exists right now.

The real issue is that mobile operators need to recognize that the market they're in is the communications market. Not the mobile voice market and not the mobile data market -- but the overall communications market. That means looking for ways to serve that market both now and in the future. Right now, the solution that people are looking for has a lot to do with voice. That doesn't mean data doesn't matter -- but it shouldn't take over to the point that the lower hanging fruit get ignored completely.