Voice price war to cost telcos E15bn

NEWS A price war in the European voice traffic market would result in fixed and mobile carriers losing a total of E15bn in revenues. That's the stark warning contained in a new report on fixed-mobile substitution from Analysys. A modelled price war scenario over the next five years by the telecoms consultancy shows fixed voice revenue declining from E96bn to E83bn, with call minutes staying the same. However, mobile voice call revenues would also fall - by two per cent - from E89bn to about E87bn in 2007 despite a 69 per cent increase in call volumes. The message from the report's author, Eddie Murphy, is that mobile operators reducing their rates to win business may ultimately harm the whole industry. However, the answer is not as simple as urging telcos to be careful with pricing at their fixed and mobile arms. Some mobile operators, such as Vodafone, have no fixed assets, while others are new 3G licence holders or virtual network operators with no fixed interests. Hutchison 3G and Virgin Mobile are examples of these respectively. Two scenarios non-price war scenarios from Analysys are: maintaining the status quo and encouraging controlled competition, whereby mobile operators target particular customer segments to grow their revenues. More details about the report can be found at: http://www.research.analysys.com/store .