North American Domestic & International Long Distance Markets

Abstract

Bundled Solutions Gain in Popularity in the North American Domestic and International Long Distance Markets

Traditional local and long distance companies are facing competition from cable multiple service operators (MSOs) and VoIP providers that have begun offering voice services. In the current market scenario, service providers that bundle long distance with local access and other services such as wireless, Internet access, and video are likely to gain an edge over those that offer long distance as a standalone service. Such bundled solutions are becoming key vendor tools to upsell and differentiate from the competition. While customers access to multiple calling modes such as landline phones, wireless, and pre-paid calling cards has made it relatively easy for carriers to offer such combined services, they are finding it increasingly difficult to invest in and promote long distance as a separate service line. In order to augment revenues in the future, service providers will have to focus on niche areas such as business toll-free, conferencing, and call center solutions.

This Frost & Sullivan research provides a comprehensive analysis of the North American domestic and international long distance markets. It examines the challenges that telecom carriers and long distance providers face in developing strategies for revenue growth and sustaining profitability. The study also discusses key driving and restraining factors and gives strategic recommendations for revenue generation and capturing market share.

Flat Rate Plans and Higher Minute Bucket Plans Are Spurring Growth

Falling prices for domestic and international long distance calling and changing revenue models are key drivers in this market. "Per minute calling charges are giving way to flat rate and high minute bucket plans," notes the analyst of this research. "Carrier access fees have also fallen over the years contributing to declining costs and lower prices for consumers."

Wireless carriers are also contributing to the trend of falling prices by offering national wireless calling plans that include domestic long distance minutes with no extra roaming charges. Other companies provide flat rate plans that allow unlimited local and domestic long distance calling with additional features, such as voice mail and caller ID, for a fixed monthly price that varies from state to state.

Increasing Wireless Usage and VoIP Drive Growth

Wireless mediums are attracting a significant portion of the domestic long distance traffic while VoIP is likely to constitute a major chink of the international long distance calls. This is primarily because wireless prices for international calling are comparatively higher and the current national wireless plans include only domestic long distance minutes.

"In the near future, VoIP will compete vigorously with switched wireline," observes the analyst. "Once this happens, international usage of minutes is likely to move to VoIP, since it offers higher cost savings." It is expected that around 17 percent of domestic long distance minutes will shift to VoIP by 2011 while the corresponding shift for international long distance is likely to be much higher at about 30 percent.