International voice traffic growth is slowing: consolidation ahead?

13 Dec 2007

New research from TeleGeography reveals that international voice traffic growth is slowing, after decades of rapid growth. International voice traffic grew approximately 15% annually, from less than 18 billion minutes in 1986 to just under 300 billion in 2006. Deregulation, falling call prices, and rapid mobile subscriber growth helped to sustain the long boom. Recently, however, the effects from these factors have petered out: international calls grew only 10 percent in 2006, and signs point to continued sluggish growth in 2007.

Skype and other computer-based voice services are a key reason for the slowdown. According to TeleGeography estimates, Skype generated approximately 14 billion minutes of international traffic in 2006. “Skype only accounts for a small share of international calls. But they’re generating enough volume to have a clear impact on the growth rate of traditional calls,” said TeleGeography analyst Stephan Beckert.

This trend presents a challenge to international carriers. With average international calling prices 70 percent lower than they were 10 years ago, scale has become an ever more important consideration. “Carriers depend on rapid traffic growth to offset falling prices. Slower volume growth hurt carriers’ revenues, and will almost certainly force further consolidation in the international long distance market,” said Beckert.

Published continuously since 1989, the annual TeleGeography study is the most comprehensive source of data on the international long-distance market. To download the executive summary of the study, please visit: http://www.telegeography.com/products/tg/index.php

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