VoLTE / VoWiFi — capacity, reach, and capability

TMT Predictions 2016

Executive summary

Deloitte Global predicts about 100 carriers worldwide will be offering at least one packet-based voice service at the end of 2016, double the amount year-on-year, and six times higher than at the beginning of 2015. We estimate that approximately 300 million customers will be using Voice over WiFi (VoWiFi) and / or Voice over LTE (VoLTE); double the number at the start of the year and five times higher than at the beginning of 2015.

For most carriers launching VoLTE or VoWiFi in 2016, the primary motivation is likely to be to increase network capacity and extend the reach of their voice services. While VoLTE or VoWiFi technologies enable a range of value-added services, such as video calling, we expect the majority of carriers to exploit this additional functionality in later years, with the initial focus being on coverage and capacity.

VoLTE increases capacity as it allows operators to move voice calls off 2G and 3G networks and onto the LTE (4G) network. The often lower frequency spectrum that is freed up can be reused for data services. Additionally the LTE interface is more efficient at carrying calls relative to traditional calls: it can support up to twice as many voice users in a given bandwidth (per megahertz). Additional cost savings can be obtained from retiring legacy infrastructure, and not having to run two infrastructures in parallel, one for data and one for voice.

VoLTE also offers a range of enhancements over standard voice. For example it offers the ability to use a data connection while being on a call, superior voice call quality, faster call connection, fewer dropped calls and the ability to switch from a voice call to a video call. However while early adopters in 2016 are likely to be most fervent users of this additional functionality, many users may not notice the variation in voice quality.

Carriers are likely to use VoWiFi to extend coverage, particularly indoors, and as a result help improve customer satisfaction with the operator and lessen the likelihood of churn. The majority of mobile calls are made indoors (at least twice as many smartphone users make voice calls indoors than outdoors), but providing good internal coverage can be technically complex and expensive, particularly for lower floors and internal rooms. VoWiFi extends reach at a relatively low marginal cost. In some regards VoWiFi may even reduce operator costs, as calls placed on a smartphone would be carried over the consumer’s broadband network, freeing up some cellular capacity.

VoWiFi may at first glance appear very similar to VoIP, but there are two critical differences. Firstly it is a network operator managed and controlled service, which, for users, should mean that the call is less likely to be dropped. Secondly, VoWiFi offers native calling: there is no need to open an app to make or receive calls. A VoIP call can only be received when that specific app is open.

Long term, most operators will likely launch both VoLTE and VoWiFi services as a natural evolution towards IP-based-only communication. However, short term some carriers may decide to launch one of the two services first. The decision will likely be influenced by three main factors: the potential cost savings, the need to improve indoor coverage, and the customers’ interest in enhanced communication services.

Consumers have high expectations for voice quality, so operators should only launch VoLTE and VoWiFi services when those services are stable. Also, carriers should determine how best to advertise the two services so that consumers value the quality of voice calling and perceive the enhancements provided as value added services. This could counteract the declining trend of smartphone users not making phone calls and moving to OTT alternatives.

VoLTE / VoWiFi — capacity, reach, and capability

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