Half of voice revenue could disappear from ILEC coffers, U.S. survey says

An American report says half of exist-ing ILEC revenue-generating voice traffic could be lost within four or five years, as wireless and electronic communications gain popularity. Bell Canada helped sponsor the study because it believes many of the findings are universal. Texas-based Technology Futures Inc (TFI) produced the 68-page report, The Impacts of Competition and Technology on Local Exchange Switching Assets, to look at how other telephony providers are moving in on ILEC turf. It studied wireless, resellers, cablecos and other full-service providers. Bell was the only Canadian firm of the six-member consortium that backed the survey. Even though Canada has a higher penetration in telephones, the American data does provide useful background for a Canadian telco."The general trends are definitely applicable," Ralph Nobel of Bell told Network Letter. "The actual speed at which the evolution takes place, the specific numbers are not immediately applicable but certainly, directionally and for comparative purposes, it’s very applicable." Author Lawrence Vanston notes that resellers are the current alternative to the ILECs in providing wireline communications. He expects that will change as cablecos and other facilities-based carriers start to rollout their grids. "We assume that these full-service networks ultimately capture 50 per cent of the wireline voice market, or 77 per cent of the non-ILEC market (50%/65%), and that the process takes place over a period of about 20 years," he predicts (see chart). The migration from narrowband The value of current assets held by the telcos will be affected by wireless voice and low-speed data, the adoption of high-speed data services and the increase in data rates to over 10 Mbps. "Over time, ILECs will likely move voice customers off narrowband circuit switches even though they are efficient for voice," the TFI report says. "As data more and more dominates the traffic, it will be more efficient to maintain a single high-speed data network for voice and data than to maintain two networks." This is exactly the sort of information Bell is looking for, according to Nobel. "We’ve asked the TFI people to conduct research studies on issues that impact our depreciation characteristics," he says. Even though the other sponsors are U.S.-based, Nobel believes there is room for more Canadian content on the TFI advisory board. Bell has suggested to Telus Corp that it sign on to future projects, thus dispelling any notion of exclusivity that may arise.

Half of voice revenue could disappear from ILEC coffers, U.S. survey says

News | April 9, 2001

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