Mobile VoIP: Skype, Verizon Deal is Hot Topic

By Paula Bernier

Ask just about anyone what’s new and exciting in the area of mobile VoIP, and you hear mention of the new relationship between Skype and Verizon (News - Alert) Wireless.

The VoIP services and wireless industry leaders at Mobile World Congress in February announced an arrangement through which Skype (News - Alert) will be supported by Verizon Wireless. The Skype client was on nine Verizon Wireless smartphones when the companies launched their joint effort in March.

“I’ve been focusing on driving innovation in a few key areas for us – video, mobile, and the Web,” Jonathan Rosenberg, Skype’s new chief technology strategist, recently told INTERNET TELEPHONY. “Skype has already been incredibly successful in the area of video. Already, 34 percent of Skype-to-Skype calls include video, and that has peaked at a little more than 40 percent during holidays like Christmas or New Year’s Day. That’s just huge, and it means that the ‘network effect’ – which has really prevented real-time video from taking off in the past – has been achieved.

“We have also been very successful in the mobile sector, with deep integration with 3UK, which has now carried over 1 billion Skype-to-Skype minutes over their network, and now Verizon Wireless,” adds Rosenberg. “Plus, we launched Skype for iPhone (News - Alert), one of the most popular apps ever. My goal is to build on those leads and drive them even further.”

Skype CEO Josh Silverman in a press release issued this spring says “Verizon Wireless will give U.S. consumers the best Skype experience on mobile phones.…”

That would seem to indicate that not only is Verizon Wireless supporting at turn up the Skype client on its phones, but it’s also giving Skype traffic some kind of priority on its network. However, the companies in the announcement declined to elaborate on that part of the deal or what the financial arrangement between the partners involves.

In any case, Jonathon Gordon, director of marketing with Allot (News - Alert) Communications, notes that what’s interesting about the relationship between Skype and Verizon Wireless is that early reaction by incumbent service providers was to try to stop applications from running across their networks – or at least de-prioritize them. This deal, however, shows that Verizon Wireless is now prioritizing traffic from over-the-top types like Skype. As a result, operators can potentially advertise their data packages saying “if you’re using Skype, come to us” because it works best over our network, he says, adding that Skype is the undisputed champion in mobile VoIP, with nearly 80 percent market share.

But since many mobile plans include large buckets of calling minutes, why do customers need over-the-top voice services for mobile calling at all?

Cliff Rees (News - Alert), CEO of hosted VoIP provider XCast Labs, notes it’s because some users might use all of their regular monthly mobile calling minutes and still have a need for more.

“The mobile companies absolutely rob you blind if you go over,” he says.

Rees adds that over-the-top VoIP services also can allow mobile users to make international calls much more affordability – like for a penny and a half a minute vs. a dollar a minute to call the U.K.

Chris Carabello, director of marketing with Metaswitch Networks adds that partnering with an over-the-top type like Skype also is “a lower-cost way for the operator to deliver voice.”

Adds Carabello: “I think we’ve seen some pricing pressure on the wireless side, so it’s not surprising they’re doing everything they can to manage those costs.”

While Verizon Wireless noted in announcing the deal with Skype that the service would run over the wireless carrier’s existing 3G network, it’s worth mentioning that the network operator this year will launch its first LTE (News - Alert) markets – and that the first iteration of this 4G network will support data only. So the relationship with Skype could potentially be a way for Verizon Wireless to support voice services over LTE right out of the gate.

When you have a high-speed network like LTE with all this data, and you look at voice revenue going downward, you have to question whether it makes sense for Verizon Wireless to run two parallel networks – one for voice and one for data, notes Ajay Joseph, CTO of wholesale international VoIP provider iBasis (News - Alert). IT

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