Ovum has published the findings of its latest annual analysis of the size and make-up of the European wholesale market, based on examination of the published results of the 25 leading wholesalers operating in the European market.
The major finding of the report European Wholesale Market Share 2011–12: The Big Picture is that total market revenues declined by 6.2% in 2012 to $45.1bn. However, the same players’ European retail revenues fell by 10% in the same period.
Further probing of these companies’ wholesale revenues in the report concludes that although all three wholesale sectors had reduced in size, the fall in fixed voice revenues was much greater than that in fixed non-voice and mobile wholesale sectors.
Competitive, regulatory pressures continue to erode wholesale voice revenues
In 2012 the European wholesale fixed voice sector accounted for less than a third of total wholesale revenues in the region. Revenues from this sector were 13% lower than in 2011, continuing the downward trend we have observed since we started analyzing the market in 2003. This revenue slide results from the combination of intense competition for revenues between traditional fixed carriers, regulatory pressures on prices, and the increased popularity of consumer OTT VoIP services that bypass traditional wholesale voice providers altogether.
The carriers with the highest wholesale voice revenues experienced particularly sharp revenue declines in their domestic markets where competition is intense. The only large-scale voice carrier that grew its revenue from the fixed voice sector was Tata Communications (which has no domestic business in the region), although KPN’s iBasis subsidiary did increase its international wholesale fixed voice revenue.
We do not expect this decline to end, although it will begin to slow in four or five years as IP-based telephony becomes ubiquitous. We believe that wholesalers will begin to explore alternative pricing regimes for voice in 2014, although carriers that are not already major players in the international voice market should seriously consider outsourcing their traffic to more efficient partners.