Cellular VoIP services will generate more revenue in the U.S. than fixed VoIP by 2012, recording more than $18 billion versus about $12 billion for fixed VoIP, according to a report released Monday by Analysys.
Although mobile phone VoIP is still a rarity today, the upgrade of CDMA2000 1x EV-DO to Revision A beginning in 2007 and the upgrade of W-CDMA to 3G Long Term Evolution (LTE) beginning in 2010 will hasten the move to cellular VoIP by service providers, the market research firm said.
"The capacity, cost per megabyte and quality of service of existing 3G cellular technologies [are] not yet adequate to support a significant move to wireless VoIP services," said Mark Heath, the co-author of the report, in a statement. "EV-DO Revision A and 3G LTE will respectively create the cost benefits and new service opportunities that trigger the migration to mass market cellular VoIP."
Although cellular VoIP isn't scheduled to begin taking off for at least another year, a few smaller players have been staking out early positions in the market. Fusion Telecommunications' efonica service has recently begun offering cellular VoIP while iSkoot has been offering its version of cellular VoIP for GSM phones.
According to Analysys' forecast, major U.S. service providers Sprint and Verizon Wireless -- both use EV-DO -- would likely move to cellular VoIP earlier than Cingular Wireless and T-Mobile. The latter two mobile phone service providers are likely to upgrade to LTE technology.
Analysys said fixed and mobile voice minutes will be made up of 28 percent cellular VoIP by 2015 in the U.S. The percentage will be 23 percent in the same year in Europe. The U.K.-based research firm said cellular VoIP will account for $7.3 billion in revenues in Europe by 2012 compared with $6.9 billion from fixed VoIP.
Focusing on the competition between cellular VoIP and wide area wireless telephony, Analysys predicted that cellular VoIP will dominate over various local area and broadband wireless deployments including WiMAX.
The report stated: "Mobile operators will position cellular VoIP as a premium service, emphasizing quality of service and a range of value added features in order to resist the erosion of voice prices." Premium services cited by Analysys included instant messaging, multimedia sharing, and presence information.