Is Skype finally challenging operators' voice revenues?

The news that there has been over 1 million downloads of Skype to iPhones in just two days is challenging mobile operators to face up to the fact that their voice revenues – which for better or for worse are still the bedrock of their financial health, despite all the talk of data services – may be truly coming under threat at last. While consumer advocacy groups (and VoIP providers) are arguing for operators to open up their network (so called ‘net neutrality’), mobile operators are looking to block Skype in the name of ‘network efficiency’ and ‘non-compliance’ of the application with their network.

The VON Coalition Europe (a group that includes Internet giants like Google, Microsoft, Skype and Intel) claims that operators are blocking or degrading of content, services or applications “for motives that extend beyond efficient traffic management.” With a typical Skype call normally only using 8 to 20kbps, which can be compared to the download of an average web page, Skype in many respects is considered a low bandwidth application. However, make a Skype video call rather than a basic voice call, and the impact on the network could be very different…

With so many claims and counter-claims flying around on the true impact of services such as VoIP on a mobile network, it can be hard to see what the true picture is. Are operators justified in blocking Skype because of the impact on their network? Or is this just a cover for their deep rooted fear that Skype is about to slay the sacred cow of voice revenues?

It perhaps takes companies like Actix* provide real insight into what the real impact of services such as Skype on a mobile operator’s network performance. Working with tier one operators in North America, Europe and Asia, Actix is at the heart of operators’ network status management systems, processing over 1 terrabyte of data every day on a typical tier network.

While there is a certain inevitability about VoIP as operators look towards LTE and an all-IP network, data loads are increasing over 3G (and more so with HSPA), pushing the cost-per-bit for ever higher. With the advent of LTE, mature operators will be left with at least three overlaying Radio Access Networks (RAN) to manage - 2G, 3G and 3.9/4G networks. With a large portion of the delivery cost of every bit being RAN-related, the challenging economics of mobile broadband will enforce the need for a much sharper focus on delivery cost per data bit if operators are to remain profitable.

So maybe both sides are telling the truth ... operators are fighting a rear-guard action because they fear the impact of opening up their network to yet more data which they cannot directly monetise, while VoIP advocates are right in pointing a figure at operators' basic revenue concerns as the real motivation for their opposition.

* Actix is an AxiCom client

Google-everything

Is there no end to it? Is there nothing Google won't touch? The launch of Google Voice signals the aptly named "web monster's" next move as it munches its way pacman like through anything that comes within even a whiff of the Internet.

The technology behind it is Grand Central, and when Google acquired them in 2007, it certainly gave an indication what was to come. And while eBay may have failed to work out what to do with Skype, that's because it was a service without an application. Skype is cheap voice ... and when I'm selling stuff on eBay, the last thing I want is people calling me. If I wanted to do that, I'd advertise in the local newsagent.

But Grand Central is different. It's an application. The hosted PBX model is almost limitless in the sort of applications it can let users access, giving the user complete control over almost every aspect of their experience, from ring-back tones to voicemail, from a single number that follows you across mobile, home and work phones to permissions and profiling of different caller IDs.

Ultimately, this is what it comes down to. If VoIP is just about trashing the cost of calls, then Skype is your answer ... and operators will hate it as they have no response. But if VoIP is about applications, about wrapping additional service wrappers around the basic call, then all is not lost for the operator. They have a way to fight back against Google Voice ... afterall, when it comes to voice, no-one knows that better than a telco.

Has Nokia lost its way?

It never used to be this way. They were unassailable. The undisputed grand fromage of mobile handsets.

So news today that Nokia has had to pull its new flagship device, the Nokia 5800 with touchscreen that was touted as the response to the iPhone, really is a sign that the times are a changing. The problem, it seems, is with connection to US 3G networks. While Nokia has never really had quite the same penetration in the US as in Europe, this is clearly a blow to a company suddenly playing catch-up in a market it had always led.

As if that isn't enough, operators are also losing faith in Nokia. Orange and O2 are, apparently, both "furious" at Nokia's plans to preload Skype on the upcoming N97. While some commentators venture that this may just be posturing by O2 which is obviously an iPhone house, just the fact that the operators are publicly lambasting Nokia is a sign of the times. Personally, I still struggle to see Skype on the handset as being a major threat to operator revenues, but it is definitely a sign of the wolves at the door for the operators.

So where now for Nokia? Well, the move into the music services play (again looking to play Apple at its own game) seems to be where they're heading. It has always been a battle of the brands between Nokia and the operators, but the battle for the subscribers' cash is also hotting up.