Sunday, September 05, 2010

Australia - Revenue from mobile voice calls could be wiped out by 4G since there would be so much capacity

[smh] Revenue from mobile phone calls could be wiped out by the next wave of technology because network capacity would justify free phone calls, a telecommunications analyst says.

Bennelong SGI portfolio manager Scott Klimo says the ''golden goose'' of mobile voice revenue, which delivered $3.3 billion to Telstra and about $2.6 billion to Optus in 2009-10, will be hard to maintain when more calls were being made over wireless internet.

''The irony is that 4G, by providing more capacity for data connections, will provide vastly more capacity than will ever be required for voice communications,'' Mr Klimo wrote in a research paper due for release today.

''Therefore, the risk is that wireless operators, in meeting the requirements of their data customers, kill the golden goose of voice.''

Regulators were still defining which technology would be classified as 4G, but long-term evolution (LTE) networks were being tested by Telstra, Optus and Vodafone, Mr Klimo said.

LTE would enable all calls to be carried over the internet, and they would be billed as data rather than voice minutes.

The first LTE network will be opened in Japan later this year, according to Ovum's mobile industry analyst, Nicole McCormick.

''In a 4G world, data pricing is perhaps going to be more crucial than today because voice is going to be practically given away for free,'' she said. ''And that is why all eyes in Asia are on [Japanese carrier] NTT Docomo to see how it pitches data pricing come December.''

She said increasing data use on smartphones would initially offset the decline in voice revenue. Internet voice calls on mobiles were below expectations because carriers had kept data pricing high to avoid undermining their mobile revenue, Ms McCormick said.

While former monopoly carriers will have to adjust to lower-margins, Mr Klimo predicts that most will remain a steady-yielding investment for shareholders.

''I do think that through technological advances they can reduce costs and maintain margins, and through cash generation they can pay dividends for a long period.''

But he said Telstra was not as attractive as some because of uncertainty in Australian telecommunications and Telstra's proposed transition period, which would not deliver results until 2012 or 2013.

4G to 'kill' golden mobile goose

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