VoIP + SMS = headaches

I'm recovering a post that I half-wrote a couple of weeks ago while at the VON Europe conference in Berlin, but didn't get around to finishing.

At the time, I was surrounded by a large number of free/disruptive/parasitic VoIP enthusiasts, as well as quite a lot of operators deploying carrier-grade PSTN replacement VoIP through IMS and other platforms. Also unsurprisingly, wireless and mobility featured quite highly - lots of talk of WiFi phones, dual-mode handsets and so on. A lot of this is good stuff. I met with various wVoIP firms like Fring and Truphone, as well as companies like Rebtel that essentially do circuit-switched callback using some form of either PC or handset interface.

Subsequent to this I've also had various other calls and briefings, particular on this "signalling over IP / voice over circuit switched into a VoIP gateway" theme, which seems to be flavour of the month. There was 3 with its Skype/iSkoot handset client last week, and I had a briefing yesterday with the blogosphere's apparent favourite, TalkPlus.

But, for the most part, there is something missing. The one thing that the existing cellular industry has created, that has taken on a life and importance of its own, and which can't be IP-substituted in as easy a fashion as circuit-switched voice.

SMS.

While I disagree with many of the things that some of the more fervent mobile evangelists hold dear, I do agree that SMS has undeniable momentum, and is almost completely pervasive as a core element of mobile communications user experience. Currently, it's a market worth something between $50-75bn, depending on how you calculate it (eg including SMS-delivered content revenues net), with somewhere north of 1.2bn active users, some of whom send 100s of messages per day.

Now, I completely agree that various IM / IP-based pseudo-SMS services will emerge to cannibalise this market over time. The margins and costs of SMS are pretty ridiculous in most cases, and based mostly on "ignorance based pricing". It's a sitting duck, frankly. So I expect lot of operators will try to use IM as a form of "SMS plus" as a preemptive move, as Telefonica did recently, although I have my doubts that many of PC IM users will be hoodwinked into thinking this is anything new.

But this is a diversion for the current wVoIP and IP/cellular voice hybrid companies. For most users, SMS on mobile phones will continue to be extremely important for the forseeable future, especially as it is a lowest-common denominator service. The fact that all the IM competition will drive down SMS prices is, perversely, likely to entrench it still further.

So... if you are looking to hybridise VoIP and cellular, on single- or dual-mode phones, for consumers or enterprise, with wVoIP or circuit-to-VoIP-gateway, you need to have a good SMS story. And a good SMS user experience. It's one of the major flaws in many of the current SIP-based dual-mode WiFi offers, and perhaps UMA's only redeeming positive feature.

Some companies in the space do have an SMS story. Truphone's is impressive. Skype has an outbound SMS function, but it's not ideal, although perhaps it can get away without it as its primarily a PC platform anyway, not a start-from-scratch "mobile community" like the others. Apparently, TalkPlus will support in early 2007 - if so, I might be more impressed with its pitch than I was yesterday. (btw - TalkPlus linked via its Skype gateway was abysmal yesterday, after I'd been using SkypeOut all afternoon with fine quality)

Implementing SMS integrated with VoIP isn't easy, either. As well as the SMS Gateway or SMSC in the network, the on-device user experience has to be very good as well. Ideally, it will tie in with the "native" SMS client on the phone, using the same interface, the same predictive text, work nicely with phone book and SMS archiving and so on. Doing a kludged secondary SMS client in a Java client or Symbian app is going to be challenge.

One possible approach (a bit like Skype's in a way) is to have the VoIP number/name as a "pseudo-fixed" one, to which other people wouldn't expect to send an SMS. This is sort of OK if you get a "second line" on your handset from VoIP firm, or a geographic one as in O2's Genion or Vodafone Zuhause. But the type of "disposable" mobile numbers as pitched by companies like Tossable Digits or TalkPlus is useless without SMS support for most use cases - for example, TalkPlus' much-hyped dating example. Who organises a date these days purely on voice?

Bottom line - sorry wVoIP developers, but you're going to have to spend a lot more time & money than you anticipate on this legacy - but extremely popular - messaging technology. And don't suggest any half-arsed "oh, just use IM" alternatives without really thinking through the realities of on-device integration.