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Monday, April 03, 2006

wVoIP conference round-up

Last week, I chaired a conference on wVoIP. I'm trying to pull together various of the strands that came out of the event - quite difficult, given the breadth of speakers and attendees there, ranging from Skype to Swisscom, and Telio to TeliaSonera. (I'm not going to write up a huge post on everything that was said - but if wVoIP is of particular strategic interest, please contact me directly.)

Overall, it is becoming clear that many larger & established mobile operators see limited benefit in accelerating the spread of wVoIP, especially in its manifestation as dual-mode WiFi/cellular handsets. Many seem content (well, OK, maybe "grudgingly accepting") to use pricing as a tool to combat the threat they see from the IP side of the fence. Many seem to believe that wVoIP has no real advantages beside (possibly) lower price voice, and that there are more effective and competitive ways to achieve the same ends with simpler, ordinary GSM handsets - and fewer regulatory issues. Unlike the previous week's FMC conference, there were surprisingly few people saying that wVoIP is only a small aspect of a much wider shift towards bridging mobile and Internet/IP domains for entertainment, content, TV etc.

Conversely, various smaller players, or more "disruptive" entrants to the sector, see it as a fantastic wedge to drive among the incumbent firms. Although much of the discussion was indeed around pricing, there were other comments around new forms of fixed-mobile substitution, business models involving WiFi-only handsets, and added-value voice-related applications like presence.

Some highlights:

- Skype is clearly doing its best to appear operator-friendly. In particular, it made a valid point that almost no consumers make international calls from their mobile phones when they're at home, not roaming. If you're an expat & want to call your mum for an hour's chat, you'll do it from a landline. Adding Skype to mobiles enables operators to capture a greater share of outbound international minutes. Skype's also looking at regulatory things like emergency calls & legal intercept.
- On the other hand, Skype remains one of the few (vocal) enthusiasts for VoIP over 3G data channels - an approach derided by the cellular community as being horribly inefficient, and lacking QoS capabilities. On the other hand, there is definitely a heretic element to the mobile industry which is adopting the wireline IP stance of "who cares about inefficiency & QoS anyway? just throw bandwidth at the problem & it'll go away".
- An even lower level of enthusiasm for UMA than at the FMC congress. I asked the entire audience whether anyone was prepared to stand up as an advocate of the technology, and the best I got was "maybe. we're still trialling it". And another operator's representative claimed that they're much-trumpeted UMA deployment was still really "an experiment".
- Nobody in Europe really cares much about indoor coverage as a wVoIP driver. Not a surprise to me, but I continue to try & bang people over the head with the fact that 3G doesn't work well indoors, and get a consistent response "never mind, we'll just drop back down to 2G instead".
- Lots of "legacy mobile operators" and their suppliers and standards bodies still like the word "terminal" instead of handset, and still solidly believe that policies, handover, QoS etc is best managed centrally, rather than making applications on the phone bearer-aware.
- Cellular operators are definitely looking at more innovative ways of doing location-specific tariffing - and they essentially accept that paying a "mobility premium" is unacceptable unless you're actually mobile & moving about. Lots of talk about picocells, HomeZones and the like.
- If you're committed to a dual-mode strategy, it's the devices that count. Not just handover, battery life etc, but (and again I reiterate this regularly) the user experience is what makes or breaks it. It's that nasty handset software issue again, not the radio.
- Applicability of innovative wVoIP business models varies significantly on a country-by-country basis, depending on things like current share of outbound calls via cellular, broadband penetration, operator attitudes to fixed VoIP, distrust of the incumbent operator, % of foreigners living in the country, cultural issues around fixed-line, availability of handset subsidies etc.
- A growing number of large operators - especially in converged fixed/mobile groups - appear to be buying into the strategy of transitioning to be a "smart pipe" provider (or "conduit" if you have a pathological fear of the word "pipe" - credit Barry Shrier)
- wVoIP will appear in some unusual guises, such as adding voice to games played wirelessly on WiFi-enabled games consoles. Also quite a few people talking about prepaid WiFi-only phones for use in Metro HotZones
- lots of conspiracy theories abound around major operators' reluctance to encourage / permit the sale of dual-mode phones "If you sell that phone in quantities of a few thousand to that new entrant..... we'll stop buying a few million of your single mode ones"
- some interesting stuff being done on VoIP Interconnectivity by companies like xConnect and

Personally, most of what I heard just added weight to my existing opinion - dual-mode VoWLAN phones are disruptive, but they're also complex and expensive to get right. They have more of a role to play in driving down cellular pricing than outright substitution. What is becoming clearer is that wVoIP will not be "mass market" technology in the short term. But to be honest, the increasing level of segmentation occuring in the cellular industry suggests that operators' don't really believe in "the mass market" any more, anyway. The mobile industry is already fragmenting, as providers look for niches from which they can derive additional value - and some of these niches will be well-suited to wVoIP, while others won't.

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