Technology | Media | Telecommunications

Monday, October 12, 2009

Mobile VoIP is a Threat to the Legacy Telcos

Why all the fuss about the Google Voice service? Let me share my perspective. I've been a user since the Grand Central beta launch. It's innovative, a wonderful productivity enhancement tool, easy to configure, and it's free to use with any mobile phone.

So, why don't Telcos use their service delivery platforms to create these new offerings?

In-Stat believes Mobile VoIP could pose a direct threat to service provider voice revenue. The cost to a mobile subscriber for a minute of voice is at the center of the storm with Mobile VoIP promising to fundamentally change mobile voice economics.

The consumer cost of a minute of voice from a wireless operator can be as high as 45 cents. Admittedly, a rate as high as this would be for overage fees above a standard rate plan. Given rate plans, free week-ends, free weeknights, unlimited calling circles and other plan complexities driven by innovative marketing practices, the actual cost per minute to a subscriber is about 5 cents.

According to Kineto, Mobile VoIP will typically use about 30 kbps. Assuming that a person's cellular subscription with a mobile operator provides a 5 gigabyte mobile data cap for which they pay $30 per month, one could talk for roughly 22,222 minutes using Mobile VoIP over their data plan.

That works out to 0.135 cents minute. While using over 20,000 minutes per month isn't realistic, it does point out that Mobile VoIP offers the potential for unlimited voice calls for $30 per month.

In recent research, In-Stat asserted that Mobile VoIP is moving beyond its initial function as a new mechanism to get inexpensive international calls. While Mobile VoIP poses a direct threat to operator voice revenue, it also represents a dynamic new capability that promises numerous applications.

In-Stat projects that by 2013 Mobile VoIP applications will generate annual revenues of $32.2 billion, driven by over 278 million registered users worldwide, with revenue and users associated with Mobile VoIP being distributed among online Mobile VoIP services, 3G-Based Mobile VoIP offerings, and WiMAX/LTE Mobile VoIP offerings.

Applications such as Skype and Vonage have influenced users to think of voice as a data application. The increasing penetration of Wi-Fi in mobile devices was the beach head that Mobile VoIP applications needed. As user habits are being shaped by rich on-line communication experiences, mobile carriers' control over devices and data applications is waning.

Mobile carrier attempts to slow the spread of on-line Mobile VoIP are proving to be a challenge as well. The ominous cloud of packetized voice is on the horizon, and according to the In-Stat assessment, the compelling economics cannot be ignored.