Market musings

5 Factors Impacting VoIP Phone Service Adoption Rates for 2018

by Sasha Viasasha
October 16, 2017

Voice over IP (VoIP) is establishing itself as the new de facto backbone in business communication as aging land lines are replaced with fiber or simply no longer serviced.

There are many varieties of VoIP deployments though, from on-premise to cloud-based to hybrids, and many newer technologies built on VoIP, like Voice over LTE (VoLTE) and HDVoice. You can expect a great deal of consolidation and turbulence in 2018 as industrial evolution sorts out the winners from losers in this contest.

Businesses are adapting to this tech more slowly than consumers. The majority of American households (50.8%) are now wireless only. 70% of adults in the 25 - 34 age group (AKA millennials) are wireless only now. Meanwhile, the major carriers are no longer required by law or regulations to repair landlines when they decay in 41 out of 50 states.

There’s no doubt that VoIP and virtual phone systems represent the future of business telecom, but how quickly that future arrives for small business depends on how VoIP providers address five factors: sound quality, going public, interoperability, global mobility and the customer experience.

1. The Race to Improve Voice Quality

Many businesses delayed adopting VoIP after experiencing poor sound quality in the early years of free and low-cost providers like Skype and Google Voice. Over the past two decades since VoIP was introduced, network and sound engineers have been working intensely to improve the Quality of Service (QoS).

As VoIP data travels over the business network, available bandwidth and stress on that network have the greatest influence on sound quality. In fact, VoIP isn’t even possible for many smaller businesses until their networks can handle a specified capacity as determined by the VoIP provider.

The engineers at Tech Target addressed the VoIP echo problem head on. They recommended that business running their own VoIP system should invest in an echo canceller, which is often too expensive for most smaller businesses. The second best choice is to have the relevant cables reterminated and retested.

The biggest advances in this area have been handled internally by the top mobile providers: AT&T, Verizon and Sprint. All have introduced HDVoice options, which involves enterprise-class voice quality VoIP but delivered over cellular networks so that the company’s network capacity does not factor into the equation.

In 2018, the spread of 5G, which is expected to run at 10X the streaming speed of 4G, will help VoLTE and HD Voice more closely match the clarity of dedicated lines. The IT Toolbox wrote, “5G will also improve the quality of VoIP calls by notably reducing or even eliminating jitteriness, data transfer losses and the much-dreaded dropped call."

2. VoIP providers go public

After 18 years, one of the oldest VoIP providers in the US is finally taking the plunge and going public. Bandwidth.com just filed IPO paperwork with the SEC, hoping to raise $85 million to expand VoIP phone services.

With underwriters like Google, Microsoft and Morgan Stanley, the chances look pretty good for this particular deal. However, telecom analysts will be watching this IPO closely for indications of market strength or investor hesitancy.

Another recent deal that strongly indicates the direction of market movement is a new round of funding for Zipwhip. This texting service originally intended to enable consumer-to-business texting in the cloud, but won $9 million in Series B funding after it pivoted its tech to allow texting from VoIP phones.

VoIP providers that aren’t going public or raising funds are joining forces as the industry enters another phase of intense consolidation. Telecom industry analysts concluded, “Amid considerable M&A activity across the IT channel, one particular hotspot involves IP telephony.”

3. VoIP’s role in global mobility

Globally, there are approximately 1 billion mobile VoIP users in 2017, according to Juniper Research. That includes phone-based VoIP, VoLTE, HDVoice, video calling and WebRTC. That number is expected to reach 3 billion by 2021. There are 165 telecom companies in 73 countries investing in VoLTE. Approximately 102 carriers have introduced HDVoice in 54 countries.

The speed of adoption of mobile phones generally will be closely tied to VoIP as national borders lose their relevancy for commerce. Virtual currencies have streamlined payments and invoicing across regions. Supply chains integrations and a stronger delivery infrastructure have made it possible to deliver goods around the world.

4. Interoperability and VoIP Integration

The mobile phone has taken over the role of the traditional office. Communications, software, data analysis, administration – all the central functions that used to be done in an office are now done on smartphones.

VoIP providers have recognized that talking on the phone should not be a separate function the requires separate hardware like an old-fashioned desk phone. In the future, it will be much more closely integrated into all the other essential work functions.

A new Google research study in association with Ipsos found that 70% of mobile users want to be able to access a “Click to call” function on business websites. Even customers who primarily make purchases online need a way to talk to a sales agent for answers to essential questions. That’s just one aspect of the omnichannel future, where buyers expect to maintain a single relationship with their preferred brands across multiple devices.

Mike Paradise, AT&T’s AVP of Network Operations, told attendees at the VoIP Conference and Expo that, “We’ve got to get to the point where services are designed to work together with a more intuitive customer experience… VoIP is the key to an integrated networking vision.”

5. The customer experience transforms VoIP

The Juniper report mentioned above concluded that, “Operators have historically used service coverage as a differentiation point…. The depth and breadth of high-quality voice services will now serve to enrich that offering and entice users: ‘always available, always best-in-class’.” 

Differentiation is shifting to which business provides the kind of services that customers want and simplicity is at the heart of it all.

Siegel+Gale created a Global Brand Simplicity Index that ranks thousands of global brands on their perceived simplicity. Their top 10 simplest brands outperformed the average global stock index by 214%.

The report also found that 63% of consumers will pay a premium for a simpler experience. Along the same lines, nearly 7 out of 10 buyers are more likely to refer brands that offer simpler customer experiences.

In the drive for simplicity, AI applications for VoIP services simplify communications. AI-based automated attendants are doing a better job of understanding human speech, and the above improvements in voice quality will vastly improve the accuracy of these algorithms. 

AI bots can rapidly evaluate schedules, suggest ideal meeting times, analyze customer call data and identify patterns in customer contacts. The most advanced virtual phone providers have built machine learning tools into Interactive Voice Response (IVR) programs. That allows bots to respond in the language of the caller or vary their accents in countries with a range of dialects.

Summing up

VoIP has evolved rapidly over the past twenty years, from an innovative concept to practical utility. In the past few years, mobile-first virtual phone systems have begun to change the way employees and customers think about business communications. Higher quality voice, large scale investment, global reach, omnichannel integration and customer orientation will determine where applications built on top of VoIP will go next.

Let's Just Talk

Legacy office phone systems like hosted PBX were too expensive and too frustrating. They weren't made for the mobile world we live in today. New systems like business VoIP services and SIP phones were less expensive, but still far too complex for the average small business. The consumer app market has changed what business buyers expect from a turnkey solution. 

Spoke is a next-generation virtual phone system, designed to transform the phones that your employees already love into a global mobile network, with local numbers in 56 countries.

In researching how employees at small companies actually use their phones, we've found out that less is more. The intuitive Spoke interface contains all the business phone line essentials that small businesses want and none of the bells and whistles that distract employees from doing their work.

Spoke is as easy to install and easy to use, yet powerful enough to replace your office phone system, eliminating up to 88% of your telecom costs.

Contact us for an interactive demo or a free trial and let's figure out how we can get you talking.

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