|
The past year has seen an increasing variety of start-ups using VoIP, or combinations of IP signaling, circuit switching and VoIP, to provide lower cost mobile telephony. Examples include Mig33, Vyke, Woize, Nimbuzz, Rok Viper, AQL, Fring, Truphone, and iSkoot. The big motivation has been reduced international roaming charges, but even local arbitrage is interesting in Europe, where per minute mobile costs are three or four times those in the U.S.
Is this the beginning of the end for mobile operators? Yes, but it will be another two to three years before mobile VoIP really takes off and up to five years before there is a serious impact on mobile operator revenues. For now, the technical issue is mobile IP capacity. The business issue is walled gardens.
Internet VoIP (define - news - alert) started in the mid-90s, but took many years to have any impact on fixed-line telephony operators. In fact, for nearly a decade, operators were more worried about subscribers dropping their fixed lines for mobile only, than they were about VoIP. Only with the widespread adoption of broadband Internet access, did VoIP become a serious issue. At dial-up speeds, VoIP is marginal. At broadband speeds, there is extra headroom so Internet quality of service (QoS) is not an issue, VoIP just works.
For example, Skype uses ~38 Kbps (in both directions). A typical broadband connection provides 1 Mbps or more downstream and a few hundred Kbps upstream. The bottleneck is upstream, but it works because the VoIP connection needs only one-fifth or one-tenth of the upstream capacity.
Compare this with mobile data connections. GPRS typically provides only 40-60 Kbps downstream. 3G provides much higher downstream rates — a few hundred Kbps per user with UMTS or 1xEV-DO today, moving to 1 Mbps or more as HSDPA and EV-DO Rev A are deployed. But these are downstream data rates. Upstream capacity is still limited to a few hundred Kbps shared among all users in a cell, until another generation of mobile technology (HSUPA and EV-DO Rev B) gets widely deployed. HSUPA trials have started and some operators may launch in 2007-2008, but widespread deployment will not occur until 2009, 2010, or beyond.
The second issue is walled gardens. Today, U.S. operators sell locked handsets that can only run operator-approved applications and reach operator-approved content. VoIP is not allowed! European handsets are more open but data plans come with fine print like this from T-Mobile (UK) for their “Web n walk” service: “not to be used for other activities such as (but not limited to): modem access for computers, Internet-based video/audio streaming services, peer-to-peer file sharing, Internet-based video download and Internet-based telephony.”
Luckily, there is substantial competition in most mobile markets. Viewing the history of mobile phone service across more than 120 countries, it is clear that markets with four or more viable operators experience incredible growth and have extremely good deals for consumers. Today there are only three significant national operators in the U.S. (Cingular, Verizon, and Sprint) but, in the recent AWS spectrum auctions, T-Mobile (US) spent more than $4B to buy additional spectrum that will allow them full national coverage. T-Mobile has committed another $2.7B to build out 3G mobile coverage on this spectrum during 2007 and 2008. This means the U.S. will have four national 3G operators pushing data services by late 2008. In addition, there is the looming threat of WiMAX in many countries, including the U.S., where Clearwire and Sprint are both building national WiMAX networks. Finally, WiFi access points continue to proliferate in every market.
The other side of this competitive picture is the phones. The most recent increment in silicon technology made it economical to manufacture phones with dual mode radios for 2G and 3G, or 2G and WiFi. Tri-mode phones (2G plus 3G plus WiFi) are feasible and should be quite economical in the next silicon cycle (typically 18 months).
With mobile broadband Internet access as a viable service, usable by PCs and mobile phones, as well as PDAs, music players, and gaming devices, and with a highly competitive market, it’s hard to believe today’s fine print will be enforced by any operator that expects to remain in business. Already, in December 2006, Hutchinson 3 has launched their X-series services in the UK. This appears to be the first flat rate open mobile Internet access service. There are still “fair use” limits but they are fairly generous (1 GB per month for as little at £5 per month) and the service specifically promotes Skype connectivity!
Both business and technology trends suggest a perfect storm is forming, perhaps slowly, but likely to burst upon the world in 2009-2010 with widespread mobile broadband Internet access, the final collapse of the walled garden and widespread mobile VoIP.
Brough Turner is Senior VP of Technology, CTO and Co-founder of NMS Communications. (news - alert) For more information, please visit the company online at http://www.nmscommunications.com.
|
