more on mobile VOIP

Hello ..

Firstly ..

Apologies for the delay. Have had a bit of a PC crash and still recovering. Meanwhile, the positing on mobile VOIP seems to have generated a great deal of discussion on the mobile applications club and has made it to the best of mobile apps club category.

Here is the original post and all the responses.

Contributors and their links include:

Original post: Ajit Jaokar CEO futuretext

Rupert Baines : VP Marketing picochip

Gerry winsor : Senior consultant HP

Tom Byrd : Mako analysis

Vladimir Dimitroff Director Prism consulting UK

Julian Bond voidstar

Alex de Carvalho tapio.com

Tomi Ahonen Tomi Ahonen consulting

William Volk Bonusmobile

Steve Kennedy eurotechnews

The disruptive potential of mobile wifi and dual mode handsets .

With the success of companies such as skype, VOIP is seen to be a ‘hot’ technology. Following the hype surrounding VOIP, ‘mobile VOIP’ is also caught up in the hype cycle.

The idea is simple – cellular calls could be made over an IP network -thus saving cost.

Currently, mobile VOIP is synonymous with ‘voice over WiFi’ i.e. voice calls made over a WiFi network. Although the WiFi network is growing fast, the world is far from being a 100% WiFi enabled space. This means, mobile VOIP suffers from the physical limitations of being near a WiFi hotspot.

The requirement of being near a WiFi hotspot plus the high cost of Mobile WiFi handsets, means that mobile WiFi is currently a niche technology. It’s initial deployment is expected to be in the enterprise or within hotspots.

The real potential of mobile VOIP lies in the use of dual mode handsets. Dual mode handsets support the seamless handover between a cellular(in practise 3G and beyond) network and a WiFi network. The technologies used in this space are currently being defined for example – Unlicensed Mobile Access (UMA) and the Mobile Integrated Go-to-Market Network IP Telephony Experience (MobileIGNITE) alliance.

Predictably, the incumbents such as mobile operators, are reluctant to support mobile VOIP because it’s a threat to their existing business(mobile voice calls). However, companies from outside the

existing value chain are keen to promote mobile VOIP. Most notably fixed line operators and handset manufacturers

However, the biggest barriers to the uptake of mobile VOIP is the pricing for IP traffic. I believe that the technology will really take off only when cheap, ‘unlimited use’ IP traffic becomes possible.

Thus, as with so many services in the mobile data industry, the barriers are not technological but commercial. There is no doubt that mobile VOIP will have a part to play in the evolution of mobility in general. Its eventual success and role will depend on a range of technical and commercial factors some of which are outlined above. However, its real significance lies in the fact that it will put a downward pressure on voice call prices (which is still the mainstay of income for mobile operators).

If cheap unlimited use bandwidth becomes a possibility then the market may well take off in other directions. For example – it could be possible to make voice calls from a 3G network through an IP client on the phone without going through a dual mode handset etc. The success of such schemes depends on low costs for IP traffic. However, note that the technology exists even today to make this possible.

Ironically, the mobile network itself is shifting to an IP core with technologies like IMS. When that happens, it should be possible to make end to end VOIP calls!

What’s your view? Is this balanced enough or have I missed something?

Who is paying? Rupert Baines

Ajit

I don’t mean to be rude, but this is quite simplistic: The thing you are missing is “Who Pays?”

There is no such thing as free lunch – nor a free phone call, nor a free byte over the airwaves.

Someone has to pay somewhere. The question is who (the user, some other user, the tax-payer – or some generous VC who pours money in…)

IP sessions (both wired & wireless) have historically been cheap for two reasons

- As best effort sessions they “filled gaps” between voice calls, increasing utilisation & efficiency.

- The voice business was the primary revenue source; covered all the costs. Data was “for free” and any money was a contribution to profit.

(the analogy is selling tickets on a plane to gap year students; better to sell them cheaop and get some money, rather than leaving it empty).

But just as BA would go bust if everyone on the plane paid the price of the gap year student, so a carrier will go bust if everyone switched to flat-fare IP (unless they change the business model to compensate)

(marginal cost vs average cost)

Most VoIP stories rely on cross-subsidy: it is easy to be cheap (free) if someone else pays the bill.

VoIP over fixed network makes sense (sort of…maybe… if you include some complex factors…)

But over the airwaves it looks really silly: the scarcest resource is air-interface capacity.

There are a finite number of Erlangs, of TXUs, or bits-per-second-per-Hz-per cell to use up. Using them more efficiently is the fundamental goal: ten years ago we switched from analog to GSM because it was three times better.

(we certainly didn’t switch for quality, or coverage or battery life – all were worse. We switched because it was cheaper for carriers)

The best reason for 3G is more voice capacity – look at 3.

Again, better efficiency leads to lower costs – which help pay for the license.

But VoIP is far *worse* for efficiency: There was an article on Unstrung which suggested it was four times worse (25% of efficiency).

In other words, it costs four times more to provide.

Now cost isn’t price: something could cost more and be sold for less. For a while.

If you ran a restaurant you might look at all-you-can-eat as a way to fill empty capacity (that quiet Monday night), or if, on average, people paid their way. But if you were to offer all-you-can-eat at peak time, and found that people consumed four times more food than usual… how long will you stay in business?

If BA were to fill all the seats on all their planes with gap year students paying below cost, and then said “fly as much as you want, for free” – how viable is that?

VoIP relies on someone else paying the bill.

If it uses four times more capacity than the equivalent voice call, you need quite a few poeople to subsidise it…

If you are the carrier who invested in spectrum, and infrastructure why should you accept that?

the barriers are not technological but commercial.

Well, yes. So are the barriers to everyone being given a free Ferrari….

If cheap unlimited use bandwidth becomes a possibility

… then lots of things become possible, yes.

If cheap unlimitted petrol becomes a possibility, if cheap unlimitted beer becomes a possibility…

But back in the real world, where things cost money and those costs needed to be covered if you are to stay in business…

I don’t mean to be sarcastic or rude, but too much discussion on this subject seems to be based on very naive thinking, or ignoring basic economics (marginal cost vs average cost). Some of it based on fallacious arguments (“VoIP is more efficient in bandwidth”)

There are interesting discussions, and some complex arguments, but lets get to the level of deatil to have them.

(For example, BT’s 21CN – but the economics on fixed are different, especially where you don’t need to pay spectrum license fees)

Mobile VoIP = power to subscribers? Gerry Winsor

Rupert makes some very valid points, i.e. “Who pays?” – however I view mobile VoIP, i.e. a “mobile Skype” like service as a potentially disruptive techology that will provide subscribers with a tool to apply pricing power to the current Operator managed voice-tariff structures. UMA and MobileIGNITE are Operator managed integration technologies and as such obviously allow the Operator to maintain tariffing control. And as Ajit points out, as IMS is rolled out an all IP overlay becomes available; and the 3GPP Rel’6 Specifications certainly include WiFi (UMA) integration connectivity, but full IMS roll-out/availability is still several months (years?) away.

Certainly it is easy to argue that the current mobile-IP pricing model is an inhibitor to mobile VoIP — without an “All you can eat” pricing structure mobile VoIP will not gain as much traction as it has done in the “fixed” domain, where a $29 monthly IP subscription makes VoIP an interesting alternative; but with Operators trying to boost ARPU by encouraging subscribers to consume more data-services at some stage the IP-traffic pricing models will have to come down to further stimulate uptake thereby providing an ‘in’ for mobile VoIP? I understand the technical inefficiencies that Rupert describes, but I would suggest that it is the IP/data-service pricing model that will have a bigger impact.

These are definitely interesting times – that’s what I love about telecoms today!

thanks rupert/Jerry Ajit Jaokar

good thoughts as usual. shall respond more after reading them rgds Ajit

from tom byrd – mako analysis

as per link

Hello!? I’m on the WLAN – 03 July 2005

With every major mobile handset manufacturer producing several WLAN enabled devices in 2006, will mobile voice calls over WLAN become a reality for the end user and a represent a new threat to carrier’s revenues?

How does it work?

For the end user this will principally allow them route calls in a similar fashion to BT’s Fusion proposition (previously known as BT Bluephone). The theory is that an end user with a WLAN enabled mobile phone would be able to conduct calls free of charge via their mobile phones with the call being transported via VoIP through the internet. When the user moves out of WLAN coverage the call would seamlessly transfer to the wide area mobility network (GSM/CDMA etc) where it would be charged for on a per minute basis in the usual fashion.

So how realistic is this scenario, who are the players and what do they have to gain or lose? Mako Analysis has taken a look at the player’s involved and how priorities for this forthcoming capability will compliment and conflict.

Operator beware

Given that between 20-50% of mobile carriers minutes originate in the home or office environment any calls that could be rerouted over WLAN would represent a significant threat to their primary revenue source of transporting mobile voice minutes. Given the growing success story of fixed VoIP players such as Skype and Vonage and the minutes that these companies are detracting from traditional fixed line voice carriers, mobile operators are well aware of the interest mobile VoIP may generate.

Demonstrating the possible

The companies that are making this technically possible, most notably Canadian wireless equipment vendor Nortel of late, are certainly keen to push the development of this technology forward. Nortel were recently the first to demonstrate the live handover of a call from UMTS to WLAN, opening the public’s eyes to what may be widely achievable with their humble mobile phone in a few short years.

Device players keen

Handset manufacturers are also keen to drive this type of functionality into the market in an effort to continually add fuel to the end consumer’s desire to upgrade their handsets. Device replacement cycles are a significant metric of relative success for the mobile device market around the world, hence making WLAN integration a key strategy for the future. Mako Analysis has learned of at least two major handset manufacturers that are due to release at lease five WLAN enabled devices in 2006.

Of the three main parts of the mobile voice over WLAN value chain it seems only the mobile operator is approaching the situation with (well justified) hesitation. However we feel the true measure of its success will not sit with any of these three but with the end customer. As such it would be prudent to understand what the customer draw of this type of proposition is and will it adequately fit that need?

Customer dictates the demand

Its clear that the primary draw of mobile voice over WLAN is its cost advantages. If cost is the main driver, we have to consider that the home user will need to invest in broadband to the home, a personal WLAN set up and a mobile device with integrated WLAN which will be for the near future an item of particular high dollar value particularly in countries where handsets are unsubsidised. Many likely users will have a home broadband connection already and a portion of these may have a home WLAN set-up making the addition of a WLAN mobile less of an investment cost decision. The user will have to make some kind of fairly significant set up investment however and given the question marks over mobile voice over WLAN quality of service, the decision to plough ahead with this set up is less of a “no brainier” than originally planned.

For the business user set up it is clear that the vast majority of organisations will already have broadband to the office and a significant proportion of these will have WLAN already installed on site. The decision in the business market therefore rests mainly on the cost benefits of equipping its workforce with high end WLAN phones in order to gain access to the cheaper call promise of mobile voice over WLAN. In the majority of cases business source cheap low end devices for the majority of their workforce and even shy away from devices that have additional features such as a camera for fear of fuelling an increase in their average bill spend. A WLAN mobile will indeed be an expensive piece of hardware for some time to come and will feature many other multimedia features such as cameras, music and video players etc. When this is coupled with mobile voice over WLAN QOS question marks, its commercial application is far from keenly anticipated at present.

When we couple these customer obstacles with a high degree of uncertainty and hesitation from the operator community, we feel that, voice over WLAN is something that can be put on the back burner for a few years yet.

Someone must pay – really?! Vladimir Dimitroff

What a shocking discovery, indeed! And we all thought lunch was free

Intelligent and insightful, Rupert’s posting goes too far in challenging VoIP ‘wisdom’, so far that it represents the other extreme.

I don’t think this forum’s readers (even less – Ajit) are confused or dumb to be taught economics fundamentals. In fact, Ajit never said free bandwidth. He said cheap which, I think, is possible within the relativity of the concept (what is cheap) – and shouldnt’ be laughed at. Witty comparisons with petrol and beer only distract from the debate. Both beer and petrol, BTW, are available for unlimited use (anyone can buy as much as they like and any variety they prefer) as opposed to restrictive operator practices in respect of data.

While the efficiency of VoIP is debatable, the repeated statement of ’4 times’ (based on a single article and taken out of context) exaggerates just as unprofessionally in the opposite direction of VoIP blind fans.

Finally, the airline examples, I am afraid, only prove the opposite of Rupert’s case: yes, someone does pay – but for what? Why should the economy flyer pay for the wasteful (and ineffective) marketing costs of persuading (read: bull$#!tting) ‘full fare’ passengers that a breakfast costs £100? Or that 2inches extra space and a marginally better meal cost 300% (!) more, often the difference to first class price? Aren’t the EasyJets and RyanAirs of this world exactly a proof that cheap IS possible? (remember: they are NOT undercutting prices at a loss, they have a profit margin in their £10 ticket).

Back to our mobile industry: the equivalent of EasyJet is already happening (and it’s not EasyMobile, unfortunately – they got it wrong. But there are several low-cost operators inEurope and a bigger number in Asia that compete with bottom prices AND are profitable). Why should the low-usage (or even average) subscriber pay for the crazy acquisition subsidies and exorbitant marketing budgets, even more wasteful and inefficient than those of airlines? Who pays, really??!!! For the acquisition costs, for the self-induced churn (by encouraging promiscuity with subsidies). Why does a porminent 3G operator give me a free handset AND 500 free minutes of voice, and then hopes to charge me their egregious prices for data and multimedia content? Could it be that I actually pay for my voice minutes, and even handset, but my data traffic is cheap and not limited to their walled gardens?

The real world is not black and white, there are not only many shades of grey in-between, but also millions of colours. I would say reasonably priced bandwidth is both conductive to, and makes the most from the disruptive potential of VoWiFi (lest we forgot our topic). The invisible hand of Mr Market will eventually bring reason to the game, as clear signs already show. Dual handsets are not accidental or miscalculated adventures of their makers, they reflect strategic thinking. Similarly, BT’s 21CN shouldn’t necessarily be limited to fixed line.

Watch this space: a certain major operator (I can only disclose their name starts with “T” and ends with “Mobile”) have just declared that “they are proud to be a bitpipe”, and are offering unrestricted Internet access and a flat rate of €10 for data over UMTS and GPRS (so far in Germany, coming to the UK later this year – did oyu know this, Ajit?). Perhaps they have asked themselves the billion-dollar question “Who Pays?” – for marketing, billing, CRM, subsidies, loyalty programmes, portals… and by focusing, as good German engineers, on the core competence of Network Operations, they can save costs and pass the saving to MVNOs and end users – and make more money in the process… If they go that way, my take is, they will have followers.

Took too many words to say what I wanted, and it was: this is not about free lunch, but not about expensive lunch, either – it’s all about optimisation.

Cheerz,

V.

Knowledge: the only product which, once sold, remains with the seller. Give it away!

VOWifi Julian Bond

http://metrofreefi.com/ US Only (boo!). Lists free wifi hotspots. A PDA with Wifi and Skype would be free in those locations. Which is partly why the various Municipal Free Wifi initiatives are attracting so much bad feeling from the Telcos.

A long way off Alex de Carvalho

Further to Julian’s post, Skype for pocket PC has existed for a while and Skype has promised a version for Symbian and embedded Linux mobiles. So the VOIP client can reside on a dual mode smartphone as well as on a pda (see the upcoming Qtek 9100). Assuming the software can handle a handover from wi-fi to 3G (and I don’t see why not), the only barrier for mass adoption and usage is indeed commercial.

For instance, my operator (one of the top French telcos) is offering the first 5,000 Laptop subscribers 8h of 3G per month for 27 Euros per month (+47 Euros for the laptop 3G connect card). This offer has no call minutes. They’re also offering the first 30,000 mobile subscribers 4 hours per month 3G access (and 4h daytime calling time) for 49 Euros per month.

So prices are high and we’ll have to wait for increased consumer demand and lower smartphone handset prices before we see operators (or MVNOs) offering cheaper and unlimited IP traffic.

And with cheap IP, you can get presence and IM …

Alex

tapio.com

Vacation musings of a wireless nature Tomi ahonen

Hi gang

What a nice little debate we have here. Good postings all around. I am enjoying a nice cup of cappuccino with my 3G modem-equipped laptop and enjoying the sunset, decided to wade into this discussion…

I would take it that all who have commented would agree that for the next 5-10 years both will co-exist. We will have WiFi (and evolution) based VoIP phone devices, AND we will have cellular telecoms devices. In all countries, both will co-exist. Just like today you can read books and magazines totally for free – at a library – yet the majority of books and magazines are bought for, and read in the home. Both business models have existed for over a century and still happily co-exist all around the world.

So there is no point in arguing WiFi/VoIP on mobiles/portables will come – of course it will come – but equally no point in claiming Cellular is in any way dead bacause of it.

Lets put the big picture in context.

WiFi phones and VoIP systems (Skype, Vonage etc) have already well in excess of 45 million users worldwide. That is a very significant user base and remarkable growth for the past two years. And already about 3 million of those users pay for their VoIP service (eg Skype with its numbering services or receiving calls under certain situations etc). So its no longer all “free”.

Who and where will we find obvious major user groups for VoIP? The biggest groups to take WiFi type phones in use and put a lot of traffic on them are the various campus systems, eg corporations replacing their PBXs at their offices etc. Also homes with (fixed/wireline) broadband internet are obvious early targets and those are rapidly getting their WiFi handsets already.

On a very rough level, if there are 1.3 billion fixed line phones in the world, and roughly 30% of all fixed line phones are with business customers. If we assume, for the sake of argument, that all of those business lines are transferred to WiFi or wireless VoIP phones during the next decade, we’d see about 390 million business WiFi phone users. Quite an attractive number, when contrasted for example with 20 million iPod users (the current darling of the IT media). I can see the business case to be appealing to any corporate CFO considering a telecoms equipment upgrade and that essentially all PBXs will be replaced by WiFi/VoIP systems over the next decade. Probably also the various smaller business telecoms systems like Centrex etc. What is the replacement cycle of business telecoms systems, probably something like 7 years or so.

At the home its a bit of a different story. If you have (fixed wireline) broadband, then WiFi is an easy logical upgrade, especially for those with a tech-nerdy bent. But will all current fixed interent users migrate to broadband. I would say no, there are many who have internet for some given app that is not brandwidth-hungry – I am thinking of my own parents who use the internet only for their banking. Then the question starts to be more one of comparing alternatives. I would argue that the total populations of WiFi phones of all kinds, will be of several orders of magnitude less than sales of mobile phones (remember we’re selling 700 million mobile phones this year alone) and these are replaced every 24 months worldwide, and much more rapidly in many heated markets.

The more alarming trend is those homes where there is no fixed line to begin with. Already 40% of all homes in Finland have abandoned the fixed line totally. If you want these to use broadband, it will be 3G broadband. Now, there are limits of “fair use” to any 3G usage, and suddenly the “free” nature of VoIP is totally demolished. No sense in me using “free” Skype on this 3G connected laptop, because I have a limit to how much Vodafone lets me use 3G capacity in any given month.

So while there are obvious markets where WiFi phones will dominate (eg business), there are others where a VoIP based mobile phone is pretty well useless – imagine a taxi driver whose home phone and internet connections are all on the cellular network.

So that leaves the middle ground. In very many cases there is then the issue of costs and benefits. Here VoIP will have a hard time to win over the addicted “Generation-C” mobile phone addicts. Yes, an adult father, bread-winner, head of the household, will try to cut family costs by asking the wife and kids to move their telecoms traffic to the family WiFi phone. I can hear it. Yet you know that inspite of this, as each of the family members has their own mobile phones, there will be significant traffic on the cellular network.

There are two interesting stats that any VoIP-believer should keep in mind. People on the whole are dumb, lazy, and irrational. Look at e-mail vs SMS text messaging. In every market – yes now even emerging in the USA – when you give young people access to both. Where e-mail is always free and SMS text messaging costs per message every time – still the clear preference in every market is that young people prefer SMS text messaging as was first shown by the widely-quoted Siemens study of 2003.

And then there is expensive vs low-cost calls. TIM in Italy was widely quoted two years ago saying 70% of all mobile phone calls on their network originated from indoors. Where the mobile phone user was near a fixed-line phone with every time cheaper calls than those on the mobile phone. Yet we are lazy. If you call me, I see you on my mobile phone. I can hit one button and return the call. I don’t think is it 12 cents or 8 cents or 4 cents on what network. I just want to return the call. I’m not going to bother to dig out the number and start to dial digit-by-digit on a fixed line phone, even if I am right next to one.

As the “threat” from VoIP will grow, so too will the mobile operators’ responses in their pricing etc. The price differential will diminish over time, not increase. Remember already that 8% of all VoIP users are PAYING to use their “free” service, so the free gets to be less free, while the expensive is getting to be more reasonably priced. Witness price war effects in Hong Kong, Denmark and Finland to see how reasonable voice minutes can become in more mature telecoms markets.

There are about 750 million PCs connected to the internet via a fixed wireline (narrowband or broadband) connection. Will everyone of these add a WiFi phone to the PC connection. I severely doubt it, but many, perhaps hundreds of millions will. Already over 150 million people connect to the internet only via a cellular network (increasingly 3G). None of these are candidates for WiFi VoIP solutions, they will not go “backwards” on their evolution.

There are 1,300 million fixed line phones. Like I said, we can assume most business users will migrate (I doubt it all, but for the sake of argument I’ll give you over 90% of this population, meaning well over 350 million). Of the homes, remember we have the broaband internet people already in this group, and those internet users listed above, so if we get a total of half of these, I’d be very impressed. Maybe we get to 600-700 million users.

Note that is almost as many as there are internet connected PCs, and over ten times the number of PDA users worldwide. To achieve this level of success, the WiFi phone sales have to DOUBLE every year for the next six years, year-on-year, to achieve this (a most dramatic growth rate, something that has never been done in human history at anything approaching these scales). If WiFi phone makers achieve this kind of sales/success/growth, its a huge success for the IT and telecoms industry, making many many millionaires in the process.

Yet keep it all in context. By September of this year we will have 2 billion cellular phones in the world. Over 30% of the human population, and practically every economically viable person on the planet carries a mobile phone. Every one of those 45 million WiFi/VoIP/Skype/Vonage phone users also has a mobile phone – many carry two or more.

The global love affair with the mobile phone is not about to disappear with this latest tech toy. Yes, if I was a business development manager or competition analysis expert with an operator, I’d keep an eye on VoIP and WiFi, but I wouldn’t lose any sleep over it.. But if I was in the fixed wireline telco business, or was an ISP, then this was the big opportunity right now.

But hey, I’m on vacation so maybe I’m on a special mood ha-ha…

Dominate !!

Tomi Ahonen / HatRat :-)

NOT Dumb at all…. William volk

Regarding:

There are two interesting stats that any VoIP-believer should keep in mind. People on the whole are dumb, lazy, and irrational. Look at e-mail vs SMS text messaging. In every market – yes now even emerging in the USA – when you give young people access to both. Where e-mail is always free and SMS text messaging costs per message every time – still the clear preference in every market is that young people prefer SMS text messaging as was first shown by the widely-quoted Siemens study of 2003.

It’s the PUSH nature of SMS vs. “standard POP/SMTP EMAIL” that makes it preferable. No need to ‘check’ your messages. You know when you got one. This preference isn’t ‘dumb’ at all.

Of course this is EXACTLY how mobile email works in Japan, hence the popularity of Mobile-Email in Japan.

William Volk

CEO, Bonus Mobile Entertainment

Rudetones(tm), Guaranteed to Offend(tm)

@ Tomi Alex De Carvalho

This is a great discussion! Just to continue on a couple of Tomi’s points:

• We will have WiFi (and evolution) based VoIP phone devices, AND we will have cellular telecoms devices.

Indeed, a wifi device (PDA, laptop, game console) can become a VoIP handset as long as you can install the software and as long as there’s audio I/O. By WiFi phone I assume you mean a dual mode handset.

So mobile VoIP can be used just through a 1) WiFi enabled device, 2) through a dual mode handset or 3) just through cellular broadband. Number 2 is an issue of dual mode handset sales as well as the availability of cheap unlimited cellular broadband. Number 3 is an issue of smartphone sales and cheap unlimited cellular broadband.

Unless the change is imposed (by the operator), some people may never adopt a WiFi device, a dual mode handset or a smartphone.

• Witness price war effects in Hong Kong, Denmark and Finland to see how reasonable voice minutes can become in more mature telecoms markets.

Lower priced voice minutes are a great benefit to consumers.

“Presence” and IM can be demand drivers in themselves. With unlimited cellular broadband you might leave your mobile IM on all day (real IM, not text messaging). Rather than calling someone, you could IM them first, as is the convention on Skype. With presence, you don’t have to guess whether people are available to communicate or not. IM is superior to SMS texting and VoIP is superior regular phone calls when there’s a presence server.

• Already over 150 million people connect to the internet only via a cellular network (increasingly 3G). None of these are candidates for WiFi VoIP solutions, they will not go “backwards” on their evolution.

I believe the tradeoff between WiFi and cellular broadband is a question of bandwith, cost and availability.

• Note that is almost as many as there are internet connected PCs, and over ten times the number of PDA users worldwide. To achieve this level of success, the WiFi phone sales have to DOUBLE every year for the next six years, year-on-year, to achieve this (a most dramatic growth rate, something that has never been done in human history at anything approaching these scales). If WiFi phone makers achieve this kind of sales/success/growth, its a huge success for the IT and telecoms industry, making many many millionaires in the process.

Indeed growth is not linear and will follow more of a J-curve as economies of scale kick in. Linear growth for dual mode handsets would occur if the change was imposed by operators during handset replacement.

• Every one of those 45 million WiFi/VoIP/Skype/Vonage phone users also has a mobile phone – many carry two or more.

The 45 million users have mobile phones, but in many cases will prefer to make a call (particularly an international call) on IP rather than cellular networks.

• The global love affair with the mobile phone is not about to disappear with this latest tech toy.

I agree the love affair is not over / will never end… but I “love” my 6680 more than any “regular” mobile phone, for all of its features (the list is long). In fact, sometimes I switch it off the cellular network and just use it as an MP3 player, camera, game console, audio recorder, pda … My only regret is that it doesn’t have WiFi!

• Yes, if I was a business development manager or competition analysis expert with an operator, I’d keep an eye on VoIP and WiFi, but I wouldn’t lose any sleep over it.. But if I was in the fixed wireline telco business, or was an ISP, then this was the big opportunity right now.

Although ISPs have the ressources, marketing, billing, customer service, clients, technology etc. to be an MVNO, I believe dual mode (and smarphone) handset prices are too high for them to create an economically viable business plan for just mobile VoIP. And consumer demand for mobile VoIP is too low because you can defer your VoIP calls until when you’re at your connected PC. So growth for mobile VoIP will depend on consumer demand, which will depend on the availability of other great mobile IP services as well, on the whole.

• But hey, I’m on vacation so maybe I’m on a special mood ha-ha…

Enjoy your vacation!

Alex

tapio.com

VoIP and mobile Steve Kennedy

There’s a big difference between mobile and fixed networks. Fixed networks are moving to VoIP as it’s considerably cheaper to build and run packet networks than TDM networks (about 40% of the cost), for a company like BT that ammounts to lots of savings.

It’s also true that VoIP adds considerable overhead to codecs i.e. GSM is 13Kb/s on a TSM based system, but when encapsulating in IP there’s at least 20% overhead, probably more realistically 25% in terms of bandwidth requirements. TDM is also synchronous while packet networks tend to be asynchronous, meaning a 2Mb/s leased line will handle 30 64Kb/s voice calls, however translate that into packet terms and you need 2Mb/s each way (assuming no packet overhead) which isn’t so easy on ADSL etc or even over the public Internet. Then there’s QoS, yes things like Skype work well most of the time, but there are times when the call quality is terrible. Would you risk your business telephony on a service with no QoS.

You can run QoS on IP networks, but that adds costs, and suddenly VoIP isn’t so attractive. Single sites looking at VoIP are probably going to get a better deal from traditional telephony services using IDA or CPS etc. Multi-site organsiations should be able to make savings if they’re paying for intersite calls (or even by standardising on just a single packet infrastructure).

Once you move into the mobile space, the problems are the same. You also have to worry about data tarrifs, as all you’re doing is changing from using the operators call tarrifs to their data tarrifs. Currently (in the UK at least) they aren’t brilliant and it’s likely to cost more for a VoIP call (well after you’ve used your inclusive MB or whatever). Skype uses ilbc which is an 8Kb/s codec, which after encoding is probably 10Kb/s+, very quickly eats your monthly allowance.

Not all operators allow IP access outside their walled gardens (3 is a good example) so running VoIP is a no go in the first place, but then they are buying market share by offering silly voice tarrifs.

Steve Kennedy

Skype on PSP? William Volk

I wonder if anyone has ported Skype to the Sony Playstation Portable?

William – what are Rudetones? Post a new thread please Tomi ahonen

Hi William

Good posting and I agree yes, push vs pull etc. I’ll comment in a moment but William – whats this on your signature? Rudetones, guaranteed to offend? Tell us more!!!

Please post a new thread so it won’t get lost in this discussion, but please tell us. I’m intrigued. If its anything like I’m thinking, I believe I’m addicted already…

PS nice to see you’re also speaking at the 3G event by Informa in Brussels :-)

Dominate

Tomi Ahonen / HatRat :-)

Quick comments of essentially agreement (sorry…) Tomi ahonen

Ok, read thru the replies and a few comments

William – I agree about the push/pull nature of SMS, e-mail, mobile e-mail (like Blackberry and e-mail in Japan). An interesting note – what if both are enabled on your phone and the culture uses both. Japan is an exception in a way, that they got mobile e-mail so early, that an SMS/text messaging/short messaging culture didn’t have time to catch hold of the younger generations. Consider Korea and think of this to yourself, and especially younger people around you. In Korea the young professionals of today say that they use SMS text messaging for all messaging communication that it can practically be used for (obviously not in writing multiple-page documents) with all contacts business and personal, who are of the same age or younger. They say that only the older generation – like their bosses – use e-mail.

An interesting twist. Not so much that the speed is the same, and that everybody has the device. But a culture-preference shift. Suddenly if you use mobile e-mail you are “an old fogie” and to show you are hip with the young, you need to use their method. Sound awefully similar to the thinking of the teenagers here in Britain, and/or the youngest of your team members etc? (Sorry, William, you’ll need to imagine this a lot harder there across the oond than we do in Europe ha-ha…)

Regardless, don’t want to twist our discussion here from the juicy one on VoIP to another potentially never-ending one on SMS.

Alex/Tapio – I agree with just about all you wrote as well (no surprise ha-ha). A few tidibits of my thoughtlets now again with a vacation-mindset..

About presence and mobile phones. I’ve been thinking about this for many years and I am increasingly thinking it is another technology solution in search of a practical customer need. First, I totally agree that presence will greatly help those who are heavy into IM, or using Skype etc. So it is a good solution for those “network age” technologies like the accessing the (fixed/wireline/narrowband/broadband/traditional) internet, voicemail, e-mail etc. But if you are on a “connected age” system, ie mobile phone which is always with you (every addicted mobile phone user has his phone either upon his/her person or within arm’s reach at all hours when awake, and the famous BDDO study from this spring said 60% of us take the phone to bed with us) and which is always on – we dont’ even turn it off – ha-ha, Alex you are probably an “inbound-overloaded” exception who turns off his phone at times – but rather turn the ringing sounds off at times and still take in the messages and logs of attempted calls..

So presence is an excellent “crutch” for old-fashioned networks to try to replicate the connectedness of the mobile networks. But for us in mobile (cellular) telecoms, the addition of presence info is perhaps a brilliant bit of technology utterly without practical uses… We’ll see, am still chewing on that item.

But I think you’re right Alex, presence will greatly enhance IM and Skype

The 45 million users have mobile phones, but in many cases will prefer to make a call (particularly an international call) on IP rather than cellular networks.

Here I come back to my earlier argument about people being lazy and irrational. Yes, first let me agree, that for many – but definitely not all – of those 45 million who have Skype or Vonage or similar solutions in use, they will often prefer to use it especially for expensive calls. Many who were among the first to get this technology have a strong need for it – very many long-distance or international calls, or for example being extremely price-sensitive, say a struggling small business or a college student etc. So these people have crossed those hurdles of learning to use the system etc.

Still, remember the Italy TIM study. 70% of all mobile phone calls are placed from indoors, essentially almost all are thus within easy access to a fixed wireline phone. Remember that Italy is one of those rare countries (like Finland and Korea) where handset subsidies are illegal. So it is not a case of a huge bucket of call minutes on lengthy monthly pre-pay contracts to subsidise the costs of handsets. No, Italy is one of the leading pre-pay markets and users pay going rates for every minute.. Yet being next to a cheaper fixed wireline phone, they still place those more expensive calls on the mobile phones.

I do believe it is the majority, mass-market, pattern for behaviour. It is too easy, lazy, to call with the mobile. Again, the early users or Skype were either very heavily in need of the savings, or else are very “engineering-type” nerdy PC people. Engineers (and people with that kind of mind-set) are not like regular people. Engineers want to always optimise and maximise etc. “Normal” people ie the mass market couldn’t bother to do a spreadsheet analysis of the best options. They go for what looks nice or is the right colour or has the appropriate feature or happens to be on sale that month or whatever.

So I’d say for parts of the existing 45 million users we will continue to see the preference of shifting the expensive telecoms traffic to VoIP etc. But also, as the price differentials come down – due to competition – this “incentive” will diminish. If the price differential is not 5x more expensive or 2x more expensive, but only 20-50% more expensive, how many will bother.

On 6680 – yes me too. I find taking it out of my pocket so much more than any recent phone or device. I got myself the 512 MB memory chip and now have a huge collection of music, music videos, film/TV clips etc.

Oh, that reminds me – in Finland they had a cool ad for the public transportation mobile payment for the Helsinki underground etc. They said the reason you want to pay with your mobile is to give you another excuse to show off your latest cool phone… I can kinda relate to that (wait, Tomi Ahonen an egomaniac show-off? what a revellation!!)

Anyway – for the Wifi you of course then have to carry the 9500 as the other phone… (oh, totally annoying, now with the high power of the 6680, even though the 9500 has the wider screen, any film clips will actually play better – with less dropped frames, less jitter and better sound synch – on the 6680 than on the 9500. I had thought I’d use the 6680 as my music player and the 9500 (with the 256 MB memory chip) as my videoplayer, but the videos are visibly better on the 6680… But I guess that is the price of rapid development isn’t it..

Steve – again I totally agree. This brings me back to what was earlier in the thread about airlines and extra capacity. Yes, fixed line telcos tend to have huge excess capacity in the basic network, and any ways to fill up that at the least additional revenues will make sense. But mobile operators are working on a congested space with a scarce resource (the spectrum) and since demand seems to be exceeding supply at every generation of mobile from 1G to what we now project for 3.G and 4G, there is a strong reason to charge a premium for that imbalance in supply/demand.

Sorry guys I couldn’t stir up more of a controversy this time ha-ha… :-)

Dominate

Tomi Ahonen / HatRat :-)

One more thing I hope you’ll agree with – Vladimir Dimitroff

Tomi, you wrote:

To achieve this level of success, the WiFi phone sales have to DOUBLE every year for the next six years, year-on-year, to achieve this (a most dramatic growth rate, something that has never been done in human history at anything approaching these scales). If WiFi phone makers achieve this kind of sales/success/growth, its a huge success for the IT and telecoms industry, making many many millionaires in the process.

Not a prblem at all 3G phones are doing it, as did GPRS ones before, Bluetooth ones, colour screen and camera phones (in a most most spectacular way). The VoWiFi or VoAnything phone is not a competing new device, it’s still a mobile phone – with one added feature, optional (!) VoIP capability.

It is as easy for the handset makers as adding the previous ‘novelty’ features – perhaps easier now, with SDR (software defined radio). Watch this space! (You’re into trends, Tomi) With the kind of modern DSP chips already in current handsets it becomes only a matter of software to make a ‘chameleon’ device that can switch instantly to a different frequency band, modulation algorithm, transmission standard, data protocol etc.etc.

I won’t be surprised if some of the hacker communities (you’re into communities too?) are already producing downloadable Java applets that can do this with some of the latest handset models.

Just like the walled gardents of 3G and limited traffic your Vodfone allows you, operators will want to control this, makers will gladly oblige and there will be many a handset model with this feature deliberately disabled – but I still believe in the ‘hidden hand’ and you cannot keep this under a pot for long.

Ajit’s use of the word disruptive was somewhat misleading in the thread title – we are talking convergence here, not substitution – and multi-mode, SDR-based devices are likely to play a major role in such convergence. Although less qualified to extend this to the infrastructure side, I can imagine similar developments will enable multi-mode base stations and network operations – largely removing bandwidth challenges and leading to optimisation of capacity, QoS, and most of all, cost.

Just my ignorant opinion, gurus know better -

Cheerz,

Vlado

Knowledge: the only product which, once sold, remains with the seller. Give it away!

Dual-mode chips Alex de Carvalho

Talking about chips, Quorum Systems has developed the Sereno QS2000, which combines cellular (GSM/GPRS/Full EDGE) and WLAN (802.11b/g), on a single chip (Check out their powerpoint presentation):

“This offers smaller footprint, lower manufacturing costs and unprecedented flexibility compared to today’s multiple chip approach.”

Inexpensive, entry-level dual-mode handhelds + voice and multimedia over WLAN = mass consumer adoption. Will carriers play this game?

Alex

tapio.com

Good viewpoint Vlado.. Tomi Ahonen

Good point Vlado. Ok, gotta admit that made sense (ha-ha)…

So it does come down to the handset manufacturers. If they start to include this ability, yes then it goes in the natural replacement cycle. But then it very significantly comes down to the (major) mobile operators/carriers wanting to sell it. Remember what happened with Nokia’s N-Gage. Launched at Nokia’s absolute top market share prowess, at almost 40%, Nokia if any could have rammed this “obvious” youth-gadget down the throats of the mobile operators. Didn’t happen. They would not support it, not subsidise it, and – together with many other Nokia marketing blunders and N-Gage design faults – the original concept flopped.

The critical point is, that all mobile operators know this story. Today if they see a disruptive technology being proposed by their handset vendors, they will just say “N-Gage” and the manufacturer will shy away from that project.

The commitment and support of the mobile operator/wireless carrier is vital for this adoption. And I’d add, that those most likely to consider this avenue would be the smallest players in any given market, and definitely not the major global brands and their alliances. So it will be a tough sell.

In the short run at least the operators will strongly resist this… :-)

Dominate – or sunbathe – whichever is your preference :-)

Tomi Ahonen / HatRat :-)

Such an interesting topic we just can’t stop – Vladimir Dimitroff

Absolutely agree about the crucial role of operators – and I expect many to want this feature disabled in their branded handsets. (Just like the pretty advanced LG phones provided by 3 (Hutchinson) have no Bluetooth and ‘cannot’ transmit pictures via IR because the operator doesn’t profit from direct transfers.

It also makes sense that smaller, niche operators may break this trend. But some ‘early bird’ developments suggest bigger players may have their own reasons:

- If T-Mobile put their money where their mouth is (with the flat €10 unlimited data tariff and the ‘we want to be a bitpipe’ mantra), they will welcome multi-mode handsets

- O2 with their Fusion have done it, albeit not (yet) on WiFi – but just watch this space

- if Motorola are better than Nokia (or Sony) in anything, it’s not stylish design or game animation – but they have an unbeatable pedigree in radio and deep vaults full of patents and yet-to-be-disclosed technology. Moto have been supplying SDR to the military long before it came as a buzzword to the mobile telcos. Coming with the earliest dual-mode handsets they are not targeting the small niche operators, believe me – those are not Motorola’s raison d’etre.

I expect some, if not all, of the major carriers to embrace dual- and multi-mode, and to profit from it.

Any bets?

Dominating in a 4 x 100 race (grams of vodka, that is) and moon-bathing -

Cheerz,

Vlado

Knowledge: the only product which, once sold, remains with the seller. Give it away!

BT Fusion Gerry winsor

As Vladimir indicates Moto have deep knowledge in this space and hence it wasn’t surprising when BT released Fusion — Phase 1: GSM + Bluetooth using a Moto phone; Phase 2: GSM + Bluetooth + WiFi due Nov. ’05? by then BT should have 2 or 3 phones available – and maybe even a Nokia variant!

My feeling is that the Fixed Operators (i.e. Fusion-like services) that will, through an MVNO relationship drive this … it will be interesting to see the BT Fusion sign-up rates sometime soon.

Ha ha, more mobile than mobile.. Tomi Ahonen

Hmmm, thinking “outloud” – this means more mobile than mobile?

I can see it coming. Through MVNO arrangements a fixed/wireline operator/carrier can give “full” mobile network services but then bundling on their WiFi and VoIP, they can be even “more mobile” than those services offered by the mobile operators. For example airplanes, we’ll get WiFi deployed on airplanes much faster than the picocells for cellular phones. A fixed operator to offer more mobility than a mobile operator? I’d like to see a player really push this, but most of those who have the means – ie BT, AT&T etc – seem to me to be way too burdened with bureaucracy to do it.. Maybe a player like Tele2?

Dominate

Tomi Ahonen / HatRat :-)

International roaming Julian Bond

Perhaps the killer app is International roaming. I’ve just been stung by the extortionate rates on mobiles in Europe as I try and call my daughter in France on her birthday. Both of us end up paying something completely absurd like £1.49 a minute because they charge her for incoming calls as well as me for outgoing. Now imagine that she’s got a dual mode VOIP device and is on a cheap or free wifi hotspot. The charge, if there is one at all, would be more like £1 for 10 minutes and only at one end.

International roaming around Europe is a huge cash cow for the operators. That makes mobile WiFi VOIP extremely disruptive technology.

Roaming? WiFi?? William volk

The WiFi hotspots in the USA have done such an ABYSMAL job of implimenting roaming, that I don’t know if using the two words together makes any sense.

I have a T-Mobile WiFi account (Starbucks) and have yet to find A SINGLE WIFI ROAMING SYSTEM that works with my account.

Inexcusable.

I now use my GPRS phone to connect my laptop to the phone when I travel (unless there’s a Starbucks nearby).

thanks all ..Ajit Jaokar

apologies for not participating. had a pc crash and still sort of recovering. thanks for the contribution. kind regards Ajit

The full thread can be found HERE