End Appears Near for Minute-based Voice PlansThe Rise of 4G means voice will soon run over all-IP networks. The technology platform that carriers use to provide voice services may change. It does not necessarily mean that the billing methodology will change for customers.  Some groups believe that once the conversion of voice to all IP networks is complete, the carriers will be forced to do away with minute-based voice plans and move to data plans that are a combination of voice, data, text and video.

The white knight in this case is the rise of 4G wireless technologies such as WiMAX and LTE, both of which will eventually be able to deliver high-quality voice calls over an IP network rather than a traditional cellular network. This may mean that users might not have any monthly limit on the number of minutes they can talk on their phones; instead, they would pay a flat rate for monthly data plan that will encompass both voice and Internet services.

The wired world in the enterprise, voice has mostly moved to IP already.  In terms of wireless, cellular carriers don’t have enough dedicated bandwidth right now to support IP-based voice. But in future developments of LTE, it will all be over IP.

Minute-based Voice Plans

Redman notes that carriers are still likely to rely upon minute-based voice plans during the initial stages of LTE and WiMAX deployment, since it will take some time to make those technologies ubiquitous. Thus, users who don’t live in major urban areas will likely have to rely on cellular connections for wireless voice service for several years after initial implementation in urban areas. But once IP-based wireless networks are up and running around the country, it will no longer make sense for users to pay by the minute or at least that is the supposition of some writers.

What is evident with the new network technologies that are on the horizon is that it will be far cheaper to provide voice and data over these networks. The question will be whether these same networks will unlock the handsets to allow customers to make VOIP calls over competing VOIP carriers such as Skype and Truphone.

Even today, the Apple 3G  Ipod Touch can utilize WIFI to connect to the IP network and it allows calls via Skype to any phone or computer connected to the Internet. This is one of the first examples of mobile Voice moving to cheaper IP networks and avoiding the minute based plans that are currently in vogue. What really enables this particular solution is a handset that connects to the internet and is independent of any carrier service plan. Currently you cannot purchase a 3G Iphone which is essentially the same platform as the Ipod touch without also signing up for a voice and a data plan from the carrier.

Access to the Network

Access to the network is the key and as long as the carriers own this access, they will be able to charge whatever they wish in the manner they wish, which includes voice based minute plans. If for example WIFI networks were to proliferate, then it may be possible to move to a data only plan or even a free network access plan. However even this scenario is problematic.

Most users do not want to look around for free access. They wish to have access at a moment’s notice were ever they are. This is the service that the carriers are so good at offering.  What is really needed is a competing carrier that offers a mobile service based on IP for a flat monthly rate. Regardless of what the content is. If a competing carrier were successful in capturing a significant portion of the business. The current carriers would be forced to change their plans. They would move from a voice based minute billing plan to a flat rate data plan.

We’re already seeing carriers’ revenue for long distance voice go down due to competing providers. For example Skype and voice access decline in proportion to data while revenue for data goes up.

Dumb Pipes!

This poses a separate problem for carriers. They have long feared being relegated to the status of “dumb pipes” that only transmit data. Especially if they don’t provide any value-added services for their customers. We have already seen this phenomenon in the wired world with the decline of LD revenues.  Wired Carriers are seeing their only major source of revenue in the future will come from fees for users to access their networks. Carriers will still make money doing this. It is much less revenue compared to the sums they hauled in, in past years.

The mobile carriers will need to rethink their billing plans as customers have more solutions available to them. Loyal customers are moving from traditional networks to competing carriers who offer fixed rate data plans. Which include voice over IP. They will need to figure out how to replace these lost revenues. Will they move to advertising based solutions? Will they move to featured data solutions that add value to customers which they are willing to pay for? Voice mail applications, 3 way calling, conference calling, or call display etc. In the data world they may still be chargeable in the VoIP world. There may be additional data services that customers will need which are still in the development stage. Whatever they are, the carriers will need to figure out a way to replace the lost revenue from minute based voice plans.

What it comes down to economically, is that it’s cheaper to do voice over IP networks. The questions is whether these savings will be passed along to the customer. Market competition will dictate how quickly this occurs and how much the customer will actually save.

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