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Friday, November 16, 2007

Drivers for cellular VoIP - why operators will catalyse VoIPo3G

As expected, my press release on my new VoIPo3G report has caused a bit of consternation. 250m is a pretty big number, and it's raised a few eyebrows, especially in North America, where VoIP has always been a particularly contentious issue.

It's worth giving a bit of background to the market drivers I'm seeing for mobile VoIP.

The easier one to tackle is that of the independent, 'over the top' VoIP players like fring, Truphone, Yeigo and Skype, as well as softphone suppliers like FirstHand. They're all piggybacking on the increasing trend towards faster 3G networks (HSPA, EVDO Rev A), flatrate data tariffs and open smartphones.

A linked trend is the growing use of laptops with 3G data cards - not just for mobile executives, but also 3G USB modems pitched at consumers as an alternative to low-end DSL or cable offerings. Most broadband PC users won't even check the terms & conditions - they'll just download Skype, or whatever cool voice-enhanced FaceBook add-on their friends have invited them to sign up for - and expect it to work. While some operators frown on this (or try & block it), quite a few don't care, as long as they get an extra broadband subscription.

The independent players (or enterprise VoIP platforms) all have their own business models. Some are looking at PSTN breakout, some on inbound interconnect, some on advertising, some are hoping to be acquired and so forth. Basically, pretty much any rationale used for over-the-top VoWLAN also applies to VoIPo3G but with wider coverage. (Yes, it's actually a bit more complicated so ask me for any more details)

But it seems to be my assertion that operators will lead the charge to mobile VoIP that has caused the most consternation.
  • First off, if the carriers want to move to future networks (call them 3.9G or 4G) like LTE, UMB or WiMAX for reasons of bandwidth, data capacity or better spectrum use, there's no choice. They're all-IP, so you have to use VoIP, or maintain parallel GSM/UMTS technology for circuit voice. The GSMA has just endorsed LTE as its preferred future technology. Another operator group, the NGMN (next gen mobile network alliance) specifically lists VoIP capabilities in its requirements document and is also closely aligned with LTE and is also watching UMB & WiMAX.

  • Secondly, from HSPA+ or EV-DO Rev A onwards, you can get more calls/Hz/cell with VoIP than circuit switched. LTE should be able to get 100-200% efficiency gains. Given that voice pricing is coming down, capping the spectrum being used for voice makes sense. I believe that operators will become increasingly spectrum-constrained, and any ways to extend the carrying capacity of their frequency allocations will have economic benefits in future. There's a lot more on the links between spectrum policy and Mobile VoIP in the report.

  • Thirdly, you can do 'cool stuff' with VoIP that you can't with circuit-switched - eg embed it in a game with stereo location cues, encrypt it, run a full unified comms client for enterprise and so on. You can also do hi-def voice and so on.

  • Fourthly, over time the operators will want to switch off their GSM and CDMA 1x networks and reuse the spectrum for UMTS or LTE or EVDO, and not have to run multiple networks in overlays

  • Fifth, FMC carriers will want to move to a single voice switching & application infrastructure (maybe IMS or some other NGN). If they're going towards VoIP on the fixed side (and ultimately turning off the PSTN), they'll want a similar migration path on mobile. Look at BT's expected opex savings deriving from moving to 21CN

It's also worth thinking about how VoIPo3G enables non-telephony VoIP applications. Operators are already launching VoIP-based push-to-talk (eg DoCoMo PushTalk in Japan), and Sprint is launching its VoIP PTT in Q1 2008 and eventually wants to migrate its 20m or so iDEN PTT subscribers over to CDMA Rev A. It wouldn't surprise me if other North American operators also go down the VoIP PTT route in the near future.

Then there are leading-edge operators like FarEasTone in Taiwan, which already has its own mobile VoIP proposition.

As I wrote the other day, the biggest sensitivity in my forecasts is to the rollout schedule of LTE and UMB. In fact, I reckon that one of the reasons that UMB will actually happen. But I also believe that the complexities of rolling out new LTE networks mean that HSPA operators ought to get earlier experience of VoIPo3G. I had an interesting meeting with Actix last night, which helps operators optimise 3G radio networks - and they highlighted the likely trickiness of getting LTE working well.

I think 2008 will see a lot of operators putting a toe in the water with VoIPo3G - some through PTT, some through IMS-based approaches like FarEasTone, and some through partnering with the independent guys. At the same time, fring & friends will also continue to gain users, and at some point we'll see a big push from Skype (and perhaps Google or Microsoft or others). 2009 will be even more busy, as we get HSPA+ rollouts, and perhaps UMB.

If you want more details about the report "Mobile VoIP: VoIPo3G Business Models", please email information@disruptive-analysis.com


Markus said...

Not to forget Austrian Jajah mobile VoIP with Japanese Emobile:

Markus Göbel's Tech News Comments:
Jajah offers pure play VoIP over 3G, inconsistent with their No Headset campaign

Dean Bubley said...


Thanks for that, I hadn't spotted that Jajah was moving beyond call-through into fully-mobile VoIP.

I'm expecting a number of the other companies in that space to follow suit over the next 12 months or so, as the addressable user base of HSPA devices & flatrate data increases.


Anonymous said...

my concern here is that many models assume the continuing existance of Skype- a company with millions of "users" no transparent revenues and no apparent business model.

Anonymous said...

Dean -

How does this play against CS over HSPA in 3GPP R8? In effect this is VoIP over HSPA, but using CS signaling and not SIP. If that happens, then what will become of IMS?

Dean Bubley said...

Last poster: yes, I've heard a couple of mentions of that R8 CS Voice thing. I haven't got the full details, but on the face of it, that could be the equivalent of 'plain vanilla mobile VoIP' as I've been talking about.

I have serious doubts about the MTSI (Multimedia Telephony Service for IMS) - it seems to be over-complicated. I think it comes from a rather grandiose and unrealistic position of attempting to create a new 'lowest common denomiator' - basically PSTN 2.0.

I think that this is extremely implausible, as we've already seeing that multiple VoIP platforms will coexist (SIP, Skype, PBXs, maybe Web 2.0 etc).

There will not be 'one VoIP to rule them all'. Not everyone will deploy IMS.

I'll post about MTSI / MMTel another day.

Anonymous said...

Spectral Efficiency does not equate to user quality. Packet burst of 40ms and PS RAB scheduling differences (like too many ARQs) are going to put a lot of delay and jitter into a VoIPo3G system I hold my breath that LTE gets it right like WiMax with UGS. Until then, you can control CS RABs with SIP and get all of the new cool features. This has reared its head as DTAP over SIP and as CS RAB on LTE proposals in recent 3GPP meetings.