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International Wholesale Voice Market is Now Driven by Mobile Calling

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February 14, 2013

International Wholesale Voice Market is Now Driven by Mobile Calling

By Gary Kim, Contributing Editor

Total international voice traffic grew nine percent in 2011, to 467 billion minutes, TeleGeography (News - Alert) says. Traditional time division multiplexed (TDM) international traffic grew three percent, to 317 billion minutes, while traffic carried as Voice over IP (VoIP) grew 25 percent, to 150 billion minutes.

TeleGeography estimates that global traffic grew five percent in 2012, to 490 billion minutes, some 34 percent of which were transported as VoIP. Among the new changes is the role of mobile calling, especially for the international wholesale voice market.

In 2011, mobile terminated calls accounted for 62 percent of wholesale traffic, and 82 percent of wholesale carrier revenue. In other words, the international wholesale voice business is almost totally a mobile market.

The number of mobile phones in service overtook the number of fixed lines in 2002. By 2011, mobiles accounted for 83 percent of total global phone lines, 43 percent of originated international call traffic, and 58 percent of terminated international traffic.

Mobiles account for a disproportionately large share of wholesale revenue because mobile network interconnection rates (the per-minute fees carriers pay to destination network operators to terminate calls on their networks) are often several times higher than fixed network termination rates.

Traffic terminated by wholesale carriers grew 11 percent in 2011, to 293 billion minutes, or 63 percent of total international call traffic, according to TeleGeography.

Wholesale traffic and revenue also are not distributed evenly around the world.  For example, 82 percent of traffic to Sub-Saharan Africa and South America, and 77 percent of traffic to Central Asia, was routed using wholesale carriers.

Calls terminated in Africa accounted for just nine percent of global wholesale traffic in 2011, but 27 percent of revenue. Conversely, calls to Asia generated 41 percent of wholesale traffic but only 31 percent of revenue, due to very low termination costs to large destinations such as China and India.

Conversely, only 43 percent of traffic to Western Europe—and just 33 percent of traffic to fixed lines in Western Europe—was terminated by wholesale carriers.

Average wholesale prices have fallen at a compounded rate of approximately eight percentannually since 2002, and though wholesale traffic grew rapidly enough to offset these steady price declines until 2008, that is no longer the case.

While wholesale traffic has grown 30 percent since, wholesale revenue has remained flat, ending with $13.2 billion of revenue in 2011, TeleGeography says.

Edited by Brooke Neuman

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