..."reduced VoIP's cost advantage".
Simultaneously, the carriers have been adding value-added services around PSTN calls to prolong the life of their old networks.
Telstra's drop in fixed-line revenue may only have been 2.1 per cent but local call revenue was actually down by more than 10 per cent. The reported fixed-line figures were made to look far less drastic thanks to a 7.2 per cent rise in revenue derived from value-added services associated with the PSTN line — such as Messagebank, silent numbers, and calling number displays.
Most organisations won't have the skills to do things like unified communications in-house.
Gartner telecommunications analyst, Bjarne Munch
Optus, meanwhile, reports that it is actually winning voice revenue in the business market. In the carrier's last two financial quarters, Optus posted gains of 4.7 per cent (Q2) and 5.3 per cent (Q3) for fixed voice among its business customers.
Optus's gains in the enterprise market, no doubt at Telstra's expense, are attributable to a partial acceptance of its customers' desire to migrate to IP.
"Our customers are getting more sophisticated in terms of network design," says John Boothroyd, general manager of products and services at Optus Business. "They are asking for more flexible numbering across their sites. They are cutting down on the number of PABX's — rather than having a PABX on every site and lots of analog lines going to branch sites, they may opt for one or two PABX's, and are connecting from those branch sites using IP VPN."
"Optus has responded," he said. "We have been building flexibility into the telephone service to help rationalise that infrastructure."
He acknowledges that these "more sophisticated network designs" are primarily being sought to make inter-office calls at lower cost.
"Yes, that has reduced the size of the overall [fixed line] market," he says. "The market trend is for fixed line revenues to be eroded by IP Telephony. But it isn't a problem for us. Optus has been helping its customers consolidate their network, which has enabled us to grow our revenues. We are winning voice business from our competitors."
Cannon notes that after years of sticking their head in the sand and simply lowering their PSTN rates, carriers like Optus are starting to recognise that the move to IP Telephony — within the business world at least — actually presents new opportunities.
"It's becoming a source of revenue for them," he says. "Data revenues are rising — carriers are selling more capacity on the data network. When you place calls over the WAN, you require more [network] capacity on the data network. You are simply shifting a bucket of money from one place to the next."
For the last two quarters, Optus's data/IP business has grown by between 8.3 per cent (Q3) and 19.7 per cent (Q2). Telstra's IP/data access revenues are also on the up, growing at 21.5 per cent according to their latest figures.
The other big growth area is managed services. Both carriers are experiencing growth in services revenues, albeit from a small base, that is easily outstripping their overall revenue growth. For the last two quarters, Optus's managed services business has grown by between five per cent (Q2) and 20 per cent (Q3), compared to overall growth of 3.6 per cent.
These revenues will only increase, says Gartner's Munch, as organisations realise that the high-end applications that VoIP enables — such as unified messaging — require the assistance of an integrator to set-up and maintain.
Both Telstra and Optus have acquired systems integrators in recent years to round out their services portfolio, such as Telstra's purchase of Kaz in 2004, and Optus's takeover of Alphawest in 2005.
Ian Smith, general manager of technology services at Alphawest, says the integrator has doubled in size in the 18 months since being acquired by Optus, and its projects around IP Telephony are driving that growth.
The enterprise market, he says, has moved out of a "tactical" approach to IP Telephony to a more "strategic" one.
"During the tactical phase, decisions were made and projects initiated based on the promise of a reduction in call costs ... now companies are thinking more strategically about using IP Telephony as the foundation for creating a collaborative work environment," said Smith.
VoIP, says Smith, is the last step in the journey to "unified communications" — the creation of single point of contact for any individual across fixed and mobile phones and internet/email applications. With unified communications, he says, comes "the mobilisation of the workforce", and the ability to present voice, video and data at the same time — enhancing both productivity within an organisation and the customer experience it offers.
"Most organisations won't have the skills to do things like unified communications in-house," Munch said. "There will be a much stronger need for managed network providers."
But Munch believes that neither of the two main carriers have built up the necessary skills to take advantage of this opportunity.
"The carriers have good experience with managing voice and video on a wide area MPLS (Multi Protocol Label Switching) network," he says. "But the future of IP telephony requires...
It wasn't long ago they didn't like broadband - because it was eating away at their dial-up revenues. Eventually they had to accept it. no different for VoIP.