The Death of International Voice Traffic

by Jeff Wiener on October 23, 2015

In the late ‘80s AT&T created a marketing campaign so effective that the phrase, “reach out and touch someone” became entrenched in our vocabulary, particularly when speaking about the power of telecommunications to connect people over long distances. But while AT&T urged people to metaphorically connect through its telephone service, advances in communications technology have given rise to a host of other ways to connect, and in fact, the literal possibility of having some sort of interactive telecommunications service where we’re able to actually touch someone seems like a distinct possibility in the not-so-distant future.

So perhaps it should come as no surprise to hear that the way AT&T thought we should “reach out and touch someone” in the ’80s is quickly falling by the wayside, as the entire telecom industry continues to trend away from traditional voice communication altogether.

Nowhere is this trend more obvious than with international voice traffic, a market where declining traffic coupled with ever-lowering international rates threatens this once critical revenue stream. As a market trends report from Hot Telecom explains, “Volume growth and price declines are now in a precarious balance. With international traffic growth slowing further, and regulators in many countries continuing to apply downward pressure on termination rates,” resulting in a sharp decline in revenues, and once the revenues are gone, it won’t be long before the traditional path of international voice communication goes along with it.

I’ll admit that while I constantly strive to stay ahead of the curve in telecom advances, there are times when I stand in awe of just how far we’ve come since the early days of Digitcom. Not only has VoIP and VoLTE disrupted the telecom industry to the point where companies are now beginning to phase out land line communication infrastructure altogether, but long distance international calling now stands on the precipice of irrelevance, with most customers opting for alternate methods of communication.

Now the influx of alternative services is really nothing new. The introduction of Skype several years ago struck a powerful blow to international voice calling, as customers could then make free, or significantly cheaper, long distance calls and bypass carriers entirely. In fact in 2013 analysts were already crediting Skype with both dominating and virtually destroying the traditional voice market.

The introduction of such services subsequently prompted regulators and carriers to drive their rates downwards, in an effort to keep pace. But the problem was that the market was already in the decline, and now lower prices coupled with a dwindling user base means that within 5 years the old way of routing calls between incumbent international carriers will be gone, replaced by a single provider “capable of guaranteeing an end to end IP path to maintain VoLTE features and capabilities.”

As I mentioned, this entire trend away from classic international voice traffic comes as part of a comprehensive industry shift away from old school telecommunications. While such an evolution is certainly not a surprise, it reinforces the point that companies in this industry (like Digitcom) will have to continue to remain agile, responsive to change, and willing to let go of the past.

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