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The bell tolls for telcos?

13 Feb 2013

New data from TeleGeography show that international telephone traffic grew 5% in 2012, to 490 billion minutes. However, as call volumes continue to grow, so do the challenges facing the international long-distance industry.

International migration, the rapid uptake of mobile phones in developing countries, and steady reductions in international call prices—especially in the form of flat-rate (and even free) calling plans—have contributed to traffic increases. Nevertheless, recent growth rates are well below the 13% average that carriers could count on to offset price declines over much of the past 20 years.

While international phone traffic growth is slowing, traffic from voice and messaging applications like Skype continues to increase at a stunning pace. TeleGeography estimates that cross-border Skype-to-Skype voice and video traffic grew 44% in 2012, to 167 billion minutes. This increase of nearly 51 billion minutes is more than twice that achieved by all international carriers in the world, combined.

Moreover, if Skype’s traffic were added to the volume of international phone calls, international voice traffic would have grown 13% in 2012, in line with historical trends. This suggests that although demand for cross-border communications has not declined, an ever growing number of callers have chosen to take telcos out of the equation.

The pressure on carriers will continue to mount in the coming years. While Skype is the best-known voice application, a host of alternatives, including Google (Talk and Voice), WeChat (Weixin), Viber, Nimbuzz, Line, and KakaoTalk have gained popularity. Perhaps most ominously for telcos, Facebook recently added a free voice calling feature to its Messenger application.

The TeleGeography Report has been a vital source of statistics and analysis for the international long-distance market for over 20 years. Visit our website to download the executive summary and to view a detailed content description.

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