How To Understand The Market For Voice Over Internet Protocol In India

Enterprise VoIP—Future Potential of the Indian

Market for Managed VoIP Solutions

9846-63

Moving to an IP Platform of Services can be Seen as Another Wave in

Convergent Communications

Section

Slide Number

Executive Summary

4

Market Overview

7

External Challenges—Drivers and Restraints

22

Forecasts and Trends

28

Roadmap to the Future

46

Appendix

52

The Frost & Sullivan Story

54

Key Findings

• The voice-over-Internet protocol (VoIP) market is growing and should maintain a

compound average growth rate (CAGR) of

% from 2014 to 2020.

• The VoIP market is primarily driven due to the cost effectiveness of the solution. A few of

the prominent reasons for the traction being witnessed in the VoIP market could be

articulated due to tremendous improvements in broadband networks, growth in

affordability, and the computation capabilities of smartphones and computers.

• Deregulation of the Indian telecom market would spur the adoption of VoIP, which would

cease the requirement of a separate infrastructure for international and domestic calls.

• Over-the-top (OTT) and Grey Market participants are gaining a formidable VoIP market

Research Objectives, Scope, and Methodology

Research Objectives

• This study provides comprehensive insights into the VoIP market of India. The base year of the study is

FY 2014. The forecast period is until FY 2020.

• The study includes a detailed analysis of the VoIP market in terms of minutes, revenue growth, market

drivers, and challenges. Key trends in the VoIP market and their effect during the studied period are

discussed.

• Detailed parameter input is given, like the growth trajectory of managed and plain VoIP through FY

2020.

• A scenario-based analysis for managed VoIP, plain VoIP, and the overall market is also included, with

growth projections until FY 2020.

Research Scope

• Geographic scope: India

• Base year: FY 2014

• Years considered for forecasts: FY 2015–2020

Research Methodology

• Primary research with service providers

• Frost & Sullivan published research services

• Published news

• Company Web sites

• Other secondary sources

Market Overview—Enterprise VoIP

Market Overview Definitions

• Plain VoIP: The VoIP provider sells only the VoIP minutes and the customer is free to buy the bandwidth and hardware from any participants. This is provided by either an Internet platform, multiprotocol label switching (MPLS) platform, or any other IP platform.

• Managed VoIP: A single provider sells the minutes, bandwidth, and hardware to the customers and the charges for VoIP minutes also include these 3 components. This is provided by either an Internet platform, MPLS platform, or any other IP platform.

• Assumptions:

o Only VoIP minutes are included for the revenue estimation of both managed VoIP and plain VoIP. o Software, equipment, and maintenance costs are excluded from managed VoIP.

TSPs provide managed VoIP and plain VoIP services. TSPs provide VoIP solutions to both large enterprises and small to medium

businesses (SMB).

Tier I ISPs provide plain VoIP services to large and SMB enterprises. Tier II ISPs have lower subscribers and limited coverage compared Telecom Service

Provider (TSP) Tier I Internet Service

Provider (ISP)

Market Overview—Competitive Forces

Intensity of Rivalry

Bargaining Power

of Customers

High

Bargaining Power

of Suppliers

Medium

Threat of New Entrants

High

Threat of Substitutes

Medium

The VoIP market is highly competitive due to the presence of Tier II and Grey Market participants. The suppliers need to keep constant track of changes in the market and adapt to them to maintain their market shares.

With regulation on termination, enterprises still need to maintain a separate infrastructure for VoIP. Also, Skype and other OTT participants help make VoIP highly competitive for market share.

The demand for VoIP is slowly

gaining traction; however, adoption is still low due to the regulation on termination. The price-driven

competitive market reduces product differentiation and thus increases competition.

The VoIP market is price-driven, with an emphasis on cost effectiveness and a high number of competitors. This gives the bargaining power to the customers.

VoIP Market: Competitive Forces, India, FY 2014–FY 2020

The barrier to entry in the VoIP market is low because an Internet telephony license is more inexpensive than a spectrum license.

Market Overview—PESTLE Analysis

VoIP Market: PESTLE Analysis, India, FY 2014–FY 2020

Political:

• Since 2002, when DOT opened up the Indian market to Internet telephony, 169 VoIP licenses have been issued and only 32 license holders are reporting Internet telephony services.

• ISPs that obtain a license for VoIP services within the country might be asked to share 9% of their

Economic:

• Low-cost call rates is the prime reason for the traction witnessed in the VoIP market in India. • Since overall economic

conditions favour development, cross-border business is

encouraged within India.

Society:

• The continued demand for real-time communication with multiple people at once is driving

customers to adopt VoIP services. • Enterprise customers basically

Market Overview—PESTLE Analysis (continued)

Rating indicates the level of impact of PESTLE factors on growth.

Technology:

• High-speed Internet access and connectivity are a prerequisite.

• The increasing Internet subscriber base also offers immense growth potential.

• Growth in affordability and computation capabilities of smartphones and computers is another reason for the uptake of VoIP services in India.

• Transforming the current system into an all IP-based network would even allow telecom operators to provide more overlay services and a greater variety of services over the same layer.

Environment:

• The underdevelopment of legal Internet telephony services in India has led to unlicensed service providers exploiting the large customer base.

Legislation:

• In India it is illegal to terminate a call on VoIP gateways, and this requires companies to have a separate public switched telephone network (PSTN) for local calls and a VoIP network for international calls. This could be seen as a blockage in the growth of VoIP services in India. • If and when it is removed, VoIP services would be

a substitute for traditional minutes, rather than a cannibalising measure.