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Which VoIP?

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Which VoIP?

Friday, 29 February 2008

European mobile operator attitudes towards Mobile VoIP are starting to thaw, but real, commercially-available services are still difficult to come by, reports Elizabeth Morgan.

It is no exaggeration to say that fixed VoIP has created an unprecedented level of turmoil and disruption in the European fixed telecommunications market. So, it’s no surprise that mobile operators have chosen to take a less than welcome attitude to the technology in a mobile context.

Some say mobile operators have got more to lose. In the fixed-world, broadband revenue is and has long been still a robust element of incumbent fixed operator total revenues. Mobile operators, however, are more reliant on their mobile voice revenues, which, on a rule of thumb, make up some 75% - 80% of total mobile operator revenues. Furthermore, the vast majority of the remaining ‘non-voice’ revenues is comprised of low-value SMS.

Despite multi-million euro investments in 3G spectrum and infrastructure, 3G data consumer spend is still a minor contributor to the revenue pot. And, if anything, the slow take-up of mobile broadband has made mobile operators even more protective of their core mobile voice revenue base.

Confusion
Fear and confusion go hand-in-hand, but analysts and industry watchdogs claim that much of the confusion and suspicion surrounding Mobile VoIP today derives from the proliferation of technologies and options confusing the scene.

Certainly, any discussion on ‘Mobile VoIP’ these days needs to be pre-empted by a definition. In the non-mobile world, Mobile VoIP is generally accepted as the application for WiFi calling using a dual-mode phone embedded with a SIP or UMA client. In Europe , a number of fixed line operators, notably BT, France Telecom, TeliaSonera and Telecom Italia have all launched a consumer version of a Mobile VoIP service, using a dual-mode phone, a hub and broadband connection, with varying degrees of success. Others, such as Deutsche Telekom and NeufCegetel, have tried dual-mode Mobile VoIP using WiFi calling using a standard, non-UMA device-embedded software client.

“When people first started talking about mobile VoIP they associated it with WiFi and saw it as a threat to 3G services. This was based on the idea of ubiquitous, cheap or even free WiFi. That just hasn't happened. In fact, large scale free WiFi appears to be in retreat, even in the

cities that pioneered it. Elsewhere it's patchy at best and largely non-existent outside of urban areas and not at all user friendly,” said Guy Middleton, Communications Director of 3

.

“I think people are beginning to realise that the best wireless access to Internet calling comes from a 3G network that is prepared to embrace the values of Internet services. Wi-fi just can't compete when it comes to quality and coverage.”

For mobile operators without either a broadband connection or WiFi network to leverage, the most obvious tech candidate for Mobile VoIP involves a mobile software client sitting on a 3G phone allowing the user to place a VoIP call over the mobile broadband network. But even then, Mobile VoIP over 3G comes in for some very different treatments.

In the non-operator world, Mobile VoIP software vendors such as Fring and Raketu allow end-users to download a piece of software onto a 3G phone which then sets up an all-IP call from the device client over the 3G network. Many claim consumers will get more interested in utilising Mobile VoIP as mobile operator data plan prices fall, and existing caveats surrounding Mobile VoIP usage over 3G fall away.

Services arrive
But 3 Group, Europe ’s most high-profile exponent of Mobile VoIP over 3G deploys a technology which allows a user to set up a Skype call from a handset which is routed to a 3-managed server over a standard, circuit-switched 3G voice connection. The 3-managed server brokers the Skype call to IP. In this scenario, the Skype calling element is a 3G voice call. The IM, presence and location features, however, are pure IP to the handset. Cleverly, 3 Group has got both elements running in tandem.

But some operators believe Mobile VoIP over 3G using standard voice will quickly become obsolete as operators move towards all-IP next generation technologies such as LTE, UMB and WiMAX.

Independent technology industry analyst and consultant and Disruptive Analysis Founder Dean Bubley believes that the arrival of such technology makes the mobile operator transition towards VoIP ‘inevitable’. With this in mind, Bubley estimates that the number of VoIP 3G users could grow from ‘virtually zero’ at the beginning of 2007 to over 250 million beyond 2012.

Others agree that mobile VoIP take up using 3G and enhanced 3G/HSDPA networks is merely a question of time and end-user education. “Cellular service providers are ripe for disruption,” claims Garrett Smith, director of marketing and business development for B2 Technologies, LLC, a VoIP hardware, software and services provider. “Once the general public can wrap their heads around the services, I expect consumer adoption to come heavy and fast.”

Warming to the idea
The benefits of “squeezing more voice and data traffic over a given slice of spectrum”, together coupled with the competitive, structural and strategic advantages of moving towards an all-IP network will furthermore redeem Mobile VoIP in mobile operators’ minds, predicts Bubley.

Certainly, European mobile operator acceptance of Mobile VoIP has been low until this point.

Back in 2006 a number of them got into hot PR water for banning VoIP application usage in conjunction with their new 3G data plans. Consumer interest watchdogs were quick to wave the ‘net neutrality’ banner over that one, and mobile operators are still at pains to explain this application-specific restriction, beyond paternalistic claims of protecting customers from a predictably poor VoIP over 3G end-user experience. To be fair, many of those bans are still in place, although some mobile operators are beginning to recognize the importance of allowing users a choice in the matter.

Mobile VoIP over 3G broadband first started appearing in earnest in 2006. In October, T-Mobile UK launched the web’n’walk MAX for laptop users, the first flat-rate data variant of the operator’s web’n’walk data series which was also one of the first in Europe to include VoIP application usage across 3G within its plan, at quite a premium.

In the UK , T-Mobile markets two flat-rate plans for mobile broadband laptop users, web’n’walk PLUS and web’n’walk MAX. Both plans are marketed as ideal for users who need to access the Internet more than five times a month, download files and share audio or video files, and both specify a maximum 3Gb fair usage policy. The web’n’walk PLUS service expressly excludes Skype calling/ VoIP usage, whereas this benefit is written into the marketing literature for web’n’walk MAX. The web’n’walk PLUS service starts at just £20 per month. Web’n’walk MAX customers are charged £35 a month. In this case the privilege of VoIP calling over a 3G network is £15 a month, making mobile VoIP a luxury application.

VoIP for the masses?
To date, the only European mobile operator to date that has attempted to push mobile VoIP towards the mass market is the 3 Group. The operator first launched Skype-to-Skype calling as a value-added mobile VoIP benefit of its X-Series initiative launched in December 2006 – just some weeks after the T-Mobile web’n’walk MAX launch. The pricing proposition was strong: The X-Series Silver service cost just £5 per month, including 5,000 minutes of Skype calls to either a PC-based Skype user or a 3 X-Series customer. With this launch, 3 Group also pushed the innovation envelope on VoIP usage abroad, effectively canceling all international data usage charges for X-Series customers using a 3 network abroad.

But the service also had its downsides. Most importantly, X-Series was rolled out in the

together with a single, high-end device (the Nokia N73), and further X-Series models were slow to appear in early 2007. Secondly, the international data roaming charge cancellation was only good for one of the few foreign markets hosting a 3 network, such as in Denmark , Italy and

Austria

. 3Group’s patchy European coverage meant that this benefit was lost on users travelling to key many European markets, such as France , Germany and

Spain

. Lastly, the ‘Skype’ element of X-Series was restricted to peer-to-peer calling, with no Skype Out facility to call non-Skype users.

Then, in late 2007, 3 Group launched its second major Mobile VoIP initiative, and the ‘Skypephone’ was born. In the

, the Skypephone is fully subsidized with a contract, and the operator has also enhanced its mass market appeal with an offer for prepaid users. Like X-Series, the service suffers from international data roaming holes (the same offer applies for users travelling over a foreign 3 network only), and the same restriction to Skype-to-Skype user calls, with no Skype Out capability.

“There’s still a lot of work to be done on Mobile VoIP. End users expect a near-identical experience from a mobile phone to the one they get on a PC, but there’s a great many kinks to iron out before that,” said Sue Gatton, independent industry analyst.