Wholesalers - Which ones deserve to survive?

By Isabelle Paradis
November 2015

International wholesale terminated traffic forecasted to grow by an average of 4.2% to 2020

According to the “Future of international carriers” report released by HOT TELECOM (www.hottelecom.com/reports/wholesale-2015.html), international traffic given to wholesalers is forecasted to grow by an average of 4.2% over the next 6 years. We believe that this growth will be partly due to an increasing number of retail service providers and operators outsourcing their international business to specialized wholesalers, allowing them to focus on their core business: their local and national markets.

In addition, VoLTE and the complexity it brings in terms of termination and roaming, will give mobile operators a real incentive to move their international traffic away from the traditional path, to IPX based wholesalers capable of guaranteeing that a clear IP path will be established to the distant service provider to maintain features and capabilities.

‘We therefore believe that the introduction of VoLTE will result in an increasing ratio of international traffic being routed via high quality termination where an increasing portion of the wholesale traffic will be terminated directly to the destination carriers’ said Steve Heap, CTO of HOT TELECOM. Currently, international wholesalers transport 69.0% of the world’s international voice traffic and this ratio is expected to reach 78.0% by the end of 2020.


However, as the number of middle-men needed to terminate high quality wholesale traffic diminishes, some of the wholesale players not adding value in a direct termination world will disappear and the multiple counting of a minute will also diminish. This will consequently have the impact of decreasing the total number of minutes declared by the wholesale community (the traffic transported by each and every wholesaler) by an average of 2.7% over the next 6 years.

Interestingly, if we look at the traffic declared by each of the top wholesalers, we perceive different growth trends from different types of wholesalers. For example, most pure wholesalers (those which do not own retail operations), have seen a decrease in the total traffic they transport of between -6% and -12% in 2014, while the global mobile groups which also operate a wholesale arm, enjoyed traffic growth between 1% and 12%. We feel this result confirms that the number of middlemen wholesalers is diminishing, while a growing portion of the traffic is terminated using a single wholesale hop, aiming for higher quality. If this trend continues, HOT TELECOM estimate that the pure wholesale middlemen will have almost completely disappeared from the wholesale ecosystem by the end of 2022.

The evolution towards IP and LTE, and the high quality, high bandwidth services it enables, is changing the laws of the jungle. Lowest price, average quality voice termination is not good enough anymore.

The answer…

So the answer to 'Which ones deserve to survive?' is simple: Wholesalers who are able and willing to support the evolution towards high quality voice and data services or to transform themselves into partners of choice by enabling specific technologies, specific markets or specific segments will be the ones who deserve to survive. Those who succeed on that journey will soar and achieve feats that none of us have ever thought possible before.

Find out more about what the future holds for international carriers who take the necessary steps to evolve above and beyond connectivity in our newly published report: http://www.hottelecom.com/reports/wholesale-2015.html

This second edition of The Future of International Carriers provides a unique and comprehensive global view of the International wholesale market including trends, drivers, traffic and revenue forecasts through to 2020 for voice (International, wholesale, VoLTE), messaging, data roaming and IPX services (voice, data and Diameter signaling). Through the course of this 90-page report, we also provide a detailed discussion of the trends that are shaping the industry as well as our view of the future carrier vision.

For more information on this report, please contact Isabelle Paradis at: paradis@hottelecom.com or +1 514 270 1636