Advent Of Skype, Google Talk: Voice business of telcos faces extinction

MANILA, Philippines - Dominant carrier Philippine Long Distance Telephone Co. (PLDT) sees the end of voice business of telecommunications providers with the rising use of low-cost and free services including Google Talk and Skype.

PLDT chairman Manuel Pangilinan said in a speech delivered by Smart Communications Inc. chief wireless advisor Orlando Vea at the Asian Carriers’ Conference held at the Shangri-La Mactan Hotel in Cebu that the rapid evolution of Voice over Internet protocol (VoIP) could lead to the extinction of voice business.

“As we all know, the main challenge posed by VoIP comes in the form over-the-top services provided by the likes of Skype and Google Talk. The current voice business of traditional operators faces extinction as more customers turn to these low-cost or free services to connect,” Pangilinan stressed.

He pointed out that traffic volumes would not rise fast enough to compensate for the continuing slide in prices.

The PLDT chief cited a study conducted by Ovum noting that VoIP would virtually account for 100 percent of international voice traffic by 2015 from the 75 percent level in 2010.

“According to Ovum, 75 percent of international voice traffic in 2010 was carried using VoIP. The figure is expected to rise even further, to virtually 100 percent by 2015. That is just three short years away,” he said.

He pointed out that there is a need to transform to new telecom wholesale-retail ecosystem.

“In my view, a polite way of saying: It’s the end of the world for our old business model – we badly need a new one,” he said.

Given the threatening prospects, Pangilinan said carriers have no choice but to reposition in the emerging wholesale ecosystem as Ovum stated that international wholesale voice providers must get bigger and better via consolidation.

Pangilinan said PLDT intends to venture into retail to take advantage of the 10 million Filipinos working overseas and as it continues to venture into broadband and multimedia.

“In the case of PLDT, we aim to long-tail our legacy wholesale businesses and go retail,” he added.

The continued rise in the number of Filipinos abroad, he explained, would provide PLDT with ready-made customer base.

On the other hand, PLDT could also leverage its 70-million strong mobile subscriber base to continue capturing voice minutes as traffic shifts to mobile from fixed landlines.

Furthermore, PLDT cited its venture into the broadband and multimedia business with its P67 billion network modernization program to handle fast growing domestic and international voice and data traffic.

 “Our intention is to deliver both traditional and new media content over our mobile and fixed platforms to complement our legacy and new communications services,” he said.

 He pointed out that new telco and content services is precisely what would be increasingly relevant to Filipinos abroad.