The Future of Voice TOTAL TELECOM Breakfast Briefing

June 2013

HOT TELECOM

‘Rumours of my death have

been greatly exaggerated’

Mr. Voice

Traffic growth

16% 1996

Net traffic add (billion minutes)

12% 2001

5% 2012

5%

10

17

24

33 2018F

Traffic: IDD + VoIP off-net

0%

5%

10%

15%

20%

25%

0

10

20

30

40

50

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Net add Growth rates Poly. (Net add) Poly. (Growth rates)

Traffic growth

Voice traffic growth (%) vs net add (billion minutes)

Traffic net add

THE GREAT MIGRATIONS

DEVICE MIGRATION Fixed to mobile

In 2006, 32% of the world’s telecom subscribers were subscribed to fixed services.

In 2013 this ratio is expected to have decreased to 14%.

In 2006, 60% of the world’s IDD traffic was generated by fixed subscribers.

In 2013 this ratio is expected to have decreased to 38%.

World fixed vs mobile IDD traffic ratio

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

IDD - Fixed

IDD - Mobile

TECHNOLOGY MIGRATION TDM to IP

In 2006, 20% of the world’s International traffic was VoIP traffic.

In 2013, this ratio is expected to have reached 32%.

In 2018, we are forecasting that 53% of the world’s International traffic will be VoIP traffic.

World IDD vs VoIP International traffic

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

IDD VoIP off-net

SOCIAL MIGRATION Calling yesterday Texting today Using apps tomorrow

SOCIAL MIGRATION Voice to Data

The UK example People in the UK are now more likely to

text than to make a phone call

While 58% of people communicated via texts on a daily basis in 2011, only 47% made a daily mobile call.

For the first time, there was a fall in the volume of mobile calls - by just over 1% - in 2011, while landline calls were down by 10%.

Overall time spent on the phone fell by 5% in 2011.

* Data taken from Ofcom report

SOCIAL MIGRATION Data to OTT

World sms vs OTT messages (billion)

0

5,000

10,000

15,000

20,000

25,000

30,000

2011 2012 2013 2014 2015 2016 2017 2018

SMS messages OTT messages

* Source: MobiThinking, Portio Research, World Bank

WHAT IS FORCING THE EVOLUTION?

IP

THE GREAT DENIAL Is that a telecom operator I see with its head in the sand?

Denial

Anger

Depression

Bargaining

Acceptance

“ When a person is faced with the reality of impending death or other extreme, awful fate, he or she will experience a series of emotional stages”

THE 5 STAGES OF TELECOM OPERATORS’ GRIEF

READY FOR THE FIGHT

-

200

400

600

800

1,000

1,200

1,400

1,600

TOTAL IDD TOTAL VoIP off-net TOTAL VoIP on-net TOTAL IDD if VoIP did not exist

A great opportunity

WHAT IS THE OPPORTUNITY?

HOW ARE OPERATORS REACTING The OTT Challenge

Do nothing (wait and see)

Block OTTs

Partner with or buying OTTs

Compete with OTTs

• Create an app

• RCS-e / Joyn

Grow other market segments

HOW ARE OPERATORS REACTING The IP Challenge

Ride the TDM wave until the end and focus on data

Get ready for the IP convergence (adopt IPX)

Grow into other segments (data, content, media)

SERVICE EVOLUTION We're in the midst of an evolution, not a revolution

THE NEW VOICE Voice will not die but it will look different

BUSINESS MODELS What’s

The

Future

Convergence of voice and data into a single pipe, offering, bundle.

Voice becomes one of a series of IP services.

Consolidation of the International wholesale market could be triggered by IPX and migration to IP.

Per minute billing for voice could evolve to a capacity based billing down the line.

‘The best way to predict the future is to create it.’ Peter Drucker

+1 514 270 1636

sales@hottelecoms.com

CONTACT INFORMATION

www.hottelecom.com

Isabelle Paradis, President

HOT TELECOM