Will there be 1 Billion Mobile VoIP Users by 2017?

A report released at the end of 2012 seemed to point towards a very promising future for mobile VoIP, which is, roughly speaking, nothing more than VoIP services run on smartphones and tablets through apps like the one offered by Skype or Google Voice. The report was released by Juniper Research and it projected the mobile VoIP world would chalk up 1 billion total subscribers by 2017. This is a bold projection, one that seems to indicate VoIP is the future of mobile telephony, but many experts read the report and asked a simple question- “How many of those users will actually generate revenue for mobile VoIP provider?”

Free is Hard to Monetize…

There are a couple ways to start answering this question. The first, immediate answer would be “Not many.” Right now VoIP services are certainly popular and growing, but most VoIP users aren’t paying a dime for their IP telephony. Many mobile VoIP apps, as well as many desktop VoIP applications, are completely free to use, and it’s questionable how many people will really want to start shelling out for what is often utilized as an auxiliary service.

What do we mean be an auxiliary service? Most people who use VoIP use it to plug holes in their traditional telephony services, such as free or low-cost international calling. These usage patterns aren’t likely to change anytime over the next 4-5 years, which calls into question whether the proportion of free-to-paid users will really change, and whether the current proportion is actually scalable.

Low Cost is Difficult to Make Profitable…

It’s also worth noting those VoIP services individuals actually pay for tend to be very low cost, such as an inexpensive $20/year premium Skype subscription or pennies-on-the-dollar international calling. Monetizing what many consider to be a free service will continue to challenge the VoIP industry, where premium services have represented the main money-making strategy so far. Some mobile VoIP providers are looking to incorporate advertising into their free services as a way of raising revenue, but it’s highly questionable how advertising can be inserted into a telephony service without alienating users or making their service unusable.

All of this throws that “1 billion” projection into question. There probably will be a billion mobile VoIP users by 2017, but that number might be little more than a vanity metric, an undercapitalized mass of people, drawing immediate parallels to Facebook’s huge undercapitalized user base.

Who Makes Up This Billion?

It’s also worth noting most of those “1 billion” subscribers will come from sources that call into question whether individual users are really flocking to VoIP as rapidly as the report might initially make you believe. A large percentage of those users will be international clients, as cheap international calling is VoIP’s edge. Many mobile VoIP users also won’t have much of a choice about switching to a VoIP service as the major mobile carriers begin to switch over to offering VoIP as their default. Finally, there’s also the question of the enterprise market and mobile VoIP, where it’s highly likely a large percentage of those billion users will be drawn from. Businesses switching to IP telephony services are likely to require their employees utilize some sort of mobile VoIP application in order to coordinate with the office’s decentralized telephony network in an effort to unify communications, especially in an increasingly Bring-Your-Own-Device technological landscape.

So what’s the verdict, is the “1 billion mobile VoIP users by 2017” projection nothing more than a lot of hot air? Not at all, the report is likely right, at least when it comes to raw numbers. But what those numbers actually mean for the VoIP market is a little misleading, as mobile VoIP’s growth likely has a lot more to do with users pushed into the technology rather than drawn to it on their own.