Wireless carriers should look at mobile VoIP as opportunity, not threat, say analysts

North American wireless operators should view the impending rise of mobile voice-over IP (VoIP) as more of an opportunity than a threat, wireless analysts say. One of the biggest issues arising from mobile VoIP is its stress on network capacity. Mobile data traffic already is skyrocketing as users download applications and videos. Mobile VoIP adds more traffic to the data stream, further squeezing networks. In a report released last week, Scottsdale, Ariz.-communications market watch firm In-Stat predicted the global number of mobile VoIP users will hit 288 million by 2013. More than half will turn to Internet-based mobile VoIP providers like Skype Ltd., Sabse Technologies Inc. (Mobivox), and Software Cellular Network Ltd. (Truphone). Users can access VoIP services through the Google Voice and Skype VoIP apps for smartphones like iPhones and BlackBerrys. Users in the Asia Pacific region will pick up mobile VoIP faster than North Americans, In-Stat said. Canadian and US carriers should be “absolutely” concerned about mobile VoIP eating their income, Jim McGregor, chief technology strategist at In-Stat, said in a phone interview. Every mobile VoIP call could represent lost voice revenue from the carriers’ traditional wireless services, particularly if the calls are made using unlimited data plans or a WiMax Internet connection. But mobile VoIP isn’t all bad news for carriers. “It is both a threat and an opportunity,” McGregor said. Carriers could add “intelligence” to their networks, such as technology affording consumer-friendly services like personal virtual private networks (VPNs) for secure information transport. The could also provide a single sign-on for all of a user’s devices, allowing them to switch from a program on a TV to a mobile device and resume where they left off. With measures like these, carriers could capitalize on the trend toward Internet-based communications. “There are potential business opportunities,” McGregor said. The challenge is to find funds to make it happen. Network upgrades are expensive, and carriers can’t afford to invest in technology that doesn’t promise a leg up. “They need to see a return on that,” McGregor said. “I think it’s more of an opportunity than a threat,” said Amit Kaminer, a telecom industry analyst with SeaBoard Group in Toronto. Kaminer noted that although service providers are losing long-distance calling minutes to mobile VoIP, the carriers don’t earn a lot of revenue from long-distance wireless calls. Mobile VoIP could represent a big revenue opportunity, Kaminer added. Voice packets add to customers’ data usage, and the more they use, the more they pay. “Whatever they lose on the rate, they will gain on volume,” he said. Some carriers seem to be embracing mobile VoIP. In the United States, AT&T Inc. last year said it would open its network to third-party VoIP applications, paving the way for users to download Skype’s iPhone application. Last month, Verizon Communications Inc. also developed a deal allowing customers to use Skype on its network, news reports said. Canadian carriers don’t seem to have tied the knot with mobile VoIP providers. Late last year, SaskTel sold Navigata, its VoIP division, because the VoIP market wasn’t taking off as much as expected. Kaminer said service providers can’t afford to ignore mobile VoIP. “Carriers now and in the future need to embrace this change,” he said. “Whatever they can do on the data side, they should do it.” Kyle McInnes, editor-in-chief at RIM-focused blog BlackBerry Cool, said it’s difficult to say whether mobile VoIP is an opportunity or a threat to service providers. The technology could alleviate voice traffic congestion on mobile networks, relieving pressure on the carriers to upgrading their voice infrastructure. But mobile VoIP does represent potential voice revenue losses, said Roberta Fox, president of Fox Group Consulting, a telecom analysis firm in Mount Albert, Ont. But there are other reasons why carriers and users may not turn to mobile VoIP on a mass scale. Fox’s firm has found that, with mobile VoIP connections, there can be as many as 12 transport nodes between a caller and a call recipient, such as the caller’s WiFi link or the recipient’s unified communications software. Nearly all of those connections are managed by different entities, such as a local network administrator, a software administrator, a mobile network operator, or even a coffee shop employee who has the switch on WiFi access. That raises questions around reliability and quality control—a concern for mobile network engineers and a gamble for users. news@thewirereport.ca

Wireless carriers should look at mobile VoIP as opportunity, not threat, say analysts

News | March 11, 2010

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