1 Enterprise VoIP Future Potential of the Indian Market for Managed VoIP Solutions Moving to an IP Platform of Services can be Seen as Another Wave in Convergent Communications September 2014
2 Contents 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
3 Key Findings The voice-over-internet protocol (VoIP) market is growing and should maintain a compound average growth rate (CAGR) of % from 2014 to 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 share by following a price-based strategy. Cloud-based services are also witnessing traction, primarily due to the flexibility they offer
4 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 The forecast period is until FY 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 A scenario-based analysis for managed VoIP, plain VoIP, and the overall market is also included, with growth projections until FY Research Scope Geographic scope: India Base year: FY 2014 Years considered for forecasts: FY Research Methodology Primary research with service providers Frost & Sullivan published research services Published news Company Web sites Other secondary sources
5 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 o Only VoIP minutes are included for the revenue estimation of both managed VoIP and plain VoIP. Software, equipment, and maintenance costs are excluded from managed VoIP. Telecom Service Provider (TSP) VoIP Market: Value Chain Participants, India, 2014 TSPs provide managed VoIP and plain VoIP services. TSPs provide VoIP solutions to both large enterprises and small to medium businesses (SMB). Tier I Internet Service Provider (ISP) Tier II ISP Grey Market Tier I ISPs provide plain VoIP services to large and SMB enterprises. Tier II ISPs have lower subscribers and limited coverage compared to Tier I ISPs. Tier II ISPs provide only plain VoIP services and cater to SMB enterprises. Grey Market participants provide inexpensive and inadequate plain VoIP minutes. Grey Market participants solely cater to SMB enterprises
6 Market Overview Competitive Forces 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. Bargaining Power of Suppliers VoIP Market: Competitive Forces, India, FY 2014 FY 2020 Threat of Substitutes Medium Intensity of Rivalry 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. Bargaining Power of Customers 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. High Threat of New Entrants High High 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 barrier to entry in the VoIP market is low because an Internet telephony license is more inexpensive than a spectrum license
7 Market Overview PESTLE Analysis VoIP Market: PESTLE Analysis, India, FY 2014 FY 2020 Political Economic: Environment Economic Low-cost call rates is the prime reason for the traction witnessed in the VoIP market in India. Political: Legislation 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 annual service revenue with the government. In 2012, a telecom commission approved VoIP services as a part of a unified license under NTP. Technology Society Since overall economic conditions favour development, cross-border business is encouraged within India. Society: The continued demand for realtime communication with multiple people at once is driving customers to adopt VoIP services. Enterprise customers basically want an integrated platform solution. This is a single, unified communication and collaboration package that supports all their specific needs. Rating indicates the level of impact of PESTLE factors on growth. Scale = 0 to 10, where 0 is a low impact 10 is a high impact
8 Market Overview PESTLE Analysis (continued) VoIP Market: PESTLE Analysis, India, FY 2014 FY 2020 Environment: The underdevelopment of legal Internet telephony services in India has led to unlicensed service providers exploiting the large customer base. Environment Political Economic Legislation Society 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. Rating indicates the level of impact of PESTLE factors on growth. Scale = 0 to 10, where 0 is a low impact 10 is a high impact. Technology 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
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