It’s hip2b2

Everybody in the telecommunications world have been watching Voice-over-IP very closely (particularly a company called Skype). Most of the landline carriers are wary that companies like Skype and Vonage would eat into their existing bread and butter landline markets. In the US today, this is slowly becoming a reality and it is not just Skype and Vonage but a dozen other operators (particularly cable TV operators) that are provided Voice-over-IP services. Voice-over-IP is steadily gaining ground.

Until recently, Voice-over-IP has been perceived as a notable but not major threat to the mobile network operators (MNO). These operators are confident that there are numerous barriers to entry before Voice-over-IP providers (such as Skype and Vonage) can eat a significant chunk of their market. However, today things are changing and these barriers are steadily disappearing.

• Mobile Network Access. Mobile operators use technologies like GSM and CDMA to provide mobile network access to their customers. Putting this infrastructure in place and licensing the frequencies has largely been a telecommunications play. Even with the rise of Voice-over-IP clients on their existing handsets, operators can always block Voice-over-IP traffic to ensure control of their networks. However, with the impending release of Mobile WiMAX this may soon change. Mobile WiMAX is a portable broadband technology promoted outside the telecommunications providers domain. A new operator can upset the current operator’s market by introducing this new radio access technology.
• Network Core. In my previous discussion about the possibility of a Low-cost Mobile Communications system, it is possible to use an all IP core system with technologies such as DNS, DHCP, RADIUS/DIAMETER and others to provide some of the core services. Other services can be connected using signaling gateways and adapters to traditional systems.
• Handset Support. Vonage currently has no mobile support. While, Skype currently only has a MS Windows Mobile client. This is currently only a very small fraction of the handset market. There are products such as the Linksys WiFi Skype Phone and Belkin Wi-Fi Skype Phone. But these are limited to WiFi networks. However, there is circulating news about a Nokia Series 60 Skype client. Now, this should answer the handset support issues and can easily use either CMTS or WiFi for network transport.
• Interoperator Peering. This is a major stumbling block for any new player in the telecommunications space. Without interoperability, users in your service are limited to only users in your service. However, using Skype, Vonage and a large number of other Voice-over-IP wholesalers are an easy way to obtain voice access because they are already voice peered to a large number of operators in different countries. Even more recently, Skype has been granted the ability to transmit and receive SMS to a large number of operators via Mobile365. The interoperability peering issues are slowly eroding.

Of course, there are other barriers such as political (frequency licensing, congressional franchising), social (getting people to use a new technology) and economic (the technology might be cheap but other costs come into play) that we have not discussed here. However, in terms of technology, it is pretty clear that an all IP solution is just around the corner. Skype MNO anyone?

PS. In the Philippines, telecommunications providers need a congressional franchise to operate in the country. Recently, the NTC has released guidelines classifying Voice-over-IP as a value-added service. Therefore, Voice-over-IP providers are not required to have a congressional franchise to operate. If Skype did decide to setup an MNO in the country it is technically a Voice-over-IP provider. However, it would still have to license frequencies from the NTC to operate a Radio Access Network (RAN). But, being a Voice-over-IP provider, it should be exempted from the congressional franchise requirement. Right?

This entry was posted on Thursday, July 27th, 2006 at 1:37 am and is filed under Mobile. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.