VoIP over 3G

VoIP over 3G is poised to become a big thing in 2006. Skype has just released its Pocket PC and Windows Mobile versions. I am told that a hack for smartphones even exists. Early reports from users attest to the voice quality of the Skype codecs (mostly iLBC) and it sounds promising when used with a processor over 200Mhz.

Furthermore, I am told also that Global IP Sound has released a new version of their codecs for the Pocket PC platform. Finally, 3G mobile operators are sharpening their pricing and Wimax looming on the horizon is a guarantee that the market will remain healthy in the coming years.

But a back of the envelope calculation makes me doubt about the economic viability of using VoIP over 3G. A quick overview of the data offers from Three and Vodafone Australia show me that based on a conversation using the iLBC codec (using those excellent benchmarks) would cost from 46 Australian cents on Three, 35 Australian cents on Vodafone up to AU$ 7.5 per minute when you go over your allocated 1GB per month and five times as much when you call from overseas (which would most likely be a GPRS call, hence not robust enough for a VoIP call).

Those rates have to be put in the perspective of a traditional voice call on those operators which cost, after discount, between 7 and 8 Australian cents. VoIP calls over 3G costs therefore five times as much as a traditional cellphone call and is currently limited to small capital centric footprints.

The unique exception would be using the iBurst services which would cost as low as 7 cents per minute. Such a service could then seriously contend as a fixed line/ADSL/mobile replacement provided they sign-up the right agreements with mobile manufacturers such HTC, retailers and customer premise equipment like Linksys One.

VoIP Call Cost in the USA

Michael Robertson, whom I admire for his entrepreneurial talent and technological flair has started what I regard as an inevitable trend in 2006. He is the founder of SIPphone, one of the best VoIP service providers and backer of the increasingly popular Gizmo Project, which has started a price war against Skype and MSN Messenger. Yahoo! Has followed suit selling USA for 1 cent per minute.

He claims “Unbelievably, SIPphone, backers of Gizmo Project, is making a profit at 1¢ per minute calls. Our cost is close to 1/2 a cent per minute. What you're witnessing is the march to free calling that I talked about a year ago.”

Although it is undeniable that in 2006 Jeff Pulver’s vision that voice will go the way of Gilette’s razors (give away the razors to recoup your margin on the blades), I cannot help but asking where Michael is buying USA at $0.005 per minute with per second billing after the first second. Last time I checked, USA continental (excluding Puerto-Rico, Alaska, Hawaii and obviously Canada) was trading for $0.008 1/1. It is impossible to make a profit with a $0.002/min margin because of slippage in connection times with the SIP/H323 protocols.

What I suspect is happening is that Yahoo! and SIPphone are playing the same game the calling card companies are playing, making a small margin not on the per minute rate but on the billing increment. Most calls last less then 3 minutes and have a 2/60^th chance of ending exactly on the dot. SIPphone makes a loss for those calls but gains by charging full minute increments to customers while being charged per second by the carriers. Some calling cards companies even charge per three minute increments and offer sub-wholesale per minute rate. Imagine a three minute and one second call costing you six minutes.

Anyway, all this discussion around per minute fees is academic if US based VoIP providers are hit with Universal Service Fund charges for both on-net and off-net calls. This bill, if enacted, would seriously hamper the development of VoIP in the USA. Vonage, Time Warner, Skype, Broadvoice may then elect to relocate their operations overseas so as not to be subjected to this charge.

Free is...well free ! (to 14 countries)

When thinking of France, one thinks of wine, cheese, Paris, attitude?. VoIP would certainly not come to mind but think again will you?

France is poised to become one of the hottest market for VoIP origination and transport of the G8 countries as its customers, fed-up with incumbant France Telecom, adopt en-masse alternative carriers like Free. Free who is by far the most aggressive ADSL and triple-play provider in France has now included free calls to 14 countries into its 30 Euro monthly subscription which includes IPTV, ADSL 2+ (up to 24Mbps) and obviously VoIP.

The 14 countries are Germany, Australia, Austria, Canada, China, Spain, USA, Ireland, Israel, Italy, The Netherlands, Portugal, the UK and Singapore. In essence, Free has released most of the countries which trade circa or below the 1 US cents wholesale.

James has some interesting stats about the French VoIP adoption which he got from here:

18% of the population over 12 has no fixed line phone
7% of the population over 12 uses voice over DSL (via Freebox, Livebox, or other access-provider based product)
4% of the population over 12 uses Skype or another IM client capable of voice.

Skype 2.0 Release

Skype 2.0 has been released here sporting the following new features according to the FAQ:

"What are the new Skype features [in Skype for Windows 2.0]?

* Best ever call quality.
* One-to-one video conversations with anyone, anywhere in the world.
* Contact list grouping – organize your Skype contacts anyway you like by creating groups for 'colleagues', 'friends' and 'family',etc.
* Mood message and local time display - so your contacts know where you're at and how you feel.
* Improved web presence through Skype buttons - display your Skype status on your blog or webpage."



There is much speculation on fellow bloggers' sites on how Skype is headed for some rough times. First came reports of employee defections after the eBay merger from OM and Andy, then channel canibalization with the incorporation of features that used to be the "sacred garden" of Skype affiliates who invested in R&D hoping for some time before Skype would eventually give it for free.

I would add to that the emergence of a P2P SIP protocol, the release of more SIP compliant hardware such as sub $100 Wifi phones, the competition from Microsoft (which has included a wideband codec in its latest release of MSN) and Gtalk.

In a nutshell, I predict that Skype has acted, not unlike ICQ in its heydays, as a catalyst for mass adoption. It was certainly not the first tool to allow point to point voice and and video chat and PSTN VoIP (MSN has offered it more than 5 years ago in partnership with IconnectHere) but it was the first tool that actually works most of the time and works well.

It is only a matter a time before competition, and especially open source competition, would catch-up and give eBay a run for its billions.

A VoIP Explorer is born !

This weblog covers the Voice Over IP (VoIP) sphere from a practionner's point of view. I will engage our readers in a dialogue about VoIP developments. I contend that VoIP is to voice, what email is to fax, namely a cheaper yet richer way of achieving the same results. On the verge of true mass adoption, I trust we should learn from the past to achieve the fullest potentials of VoIP technologies.

I wish this exchange of ideas to be informative and practical, unbiased and thoughtful, courteous yet incisive. I intend on building a federation of contributors from all horizons to discuss topics where they bring original and thought-provoking point of views. In our discussions, I propose to assume readers are fluent in VoIP, computing and internetworking terminology.

Topics cover VoIP related disruptive technologies, business models and solutions. My first three posts will reflect my views on the economics of the wholesale VoIP business model, I will also explore the last-mile fallacy, and I will attempt the ultimate "one-stop-shop deployment post" with links to all the necessary hardware/software/service providers to get an SME started with VoIP.

I invite you to bookmark this blog as you can expect regular postings and lively discussions around VoIP issues.

A VoIP Explorer is born, long live the VoIP Explorer!