In the local telco scene, not a lot have been mentioned about VOIP as a very big thing. MediaRing was trying to create something there, however they failed to take off. With a stronger partner now things might change.
VOIP will impact M1 out of the 3 local telcos more since its international calls revenue percentage is the highest among the 3 Singapore Telcos.
But the thing that worries telcos all over the world is that:With the promotion of a 12GB data plan that you will never hit, free messaging and skype to skype calls are very attractive.
If in the next 2 years smartphone like iPhone and Android phones dominate the telecoms scene, it means that it is easily possible to talk to your friends via a Skype client that runs in the background.
We may not be very far away. Verizon is starting to offer free unlimited Skype to Skype plans, which is a data +voice plan. They are aiming for new subscribers rather than reduce churn.
The client, announced at Mobile World Congress in a surprising partnership, allows Verizon Wireless smartphone users to make free Skype-to-Skype call and instant messages – with the calls running over Verizon’s voice network, not over the top of its data network as a VoIP call. Operators in general have warmed to the idea of late of third-party mobile VoIP clients, after initial concerns they would compete with core voice services.
In addition to the engineering required to make that happen – from the Verizon network calls will typically hit a Skype gateway and then be carried via the Internet to the called Skype party – the two companies also worked together on the client software experience. With the client, Skype mobile users can:
- make and receive unlimited Skype-to-Skype voice calls to any Skype contact around the globe
- send and receive unlimited instant messages with other Skype users
- manage the Skype contact list directly from the mobile application
- call international phone numbers at competitive Skype calling rates
In addition, the client runs as an always-on app in the background, meaning that for the first time Skype users will be able to get all their calls and IMs even when they are away from their computer. In addition, the client integrates the device’s native and Skype’s own address books, further integrating the service.
“This was built from the ground up to be an integrated experience,” said Russ Shaw, Skype general manager of Skype mobile, confirming that while Skype will work exclusively with Verizon on this sort of integrated experience, other Skype clients will continue to be available to run over the top of 3G and 4G data networks. However, Skype will put the bulk of its development time and mobile focus on the more integrated Verizon-style clients.
Verizon did the deal with would-be competitor Skype to build an experience customers would want, essentially focusing on customer acquisition over concerns about voice revenue erosion, said John Harrobin, senior vice president of digital media and marketing in a press conference at the CTIA show today.
For starters, customers need to purchase a voice and data plan on their smartphone to qualify to use Skype mobile. Beyond that, “from a wireless ARPU standpoint, we really don’t expect any dilution,” said Verizon’s Harrobin. “Where we create value for both of our companies is with new subscribers on Verizon wireless smart phones, the new audience that may be attracted to this.”
The Verizon Skype mobile client will initially be available on nine devices including the BlackBerry Storm 9530, Storm2 9550, Curve 8330, Curve 8530, 8830 World Edition, and Tour 9630 smartphones, as well as DROID by Motorola, DROID ERIS by HTC and Motorola DEVOUR.
Here is another case study that your ARPU might go up if you strategically tie up with your would be competitor:
The benefits of Skype – or rather, the way 3 has marketed the service – have far outweighed the much-feared cannibalization of conventional voice revenues. Nearly 80% of 3 UK’s Skype users over the past year are new to the company, and on average, they deliver 20% higher ARPU and 14% lower churn than the rest of 3’s base (this might not be as marked at some other cellcos, since 3 tends to focus on prepaid and lower priced user profiles).
Skype’s EMEA market development director, Enrico Noseda, told Mobile Today: “Our deal with 3 UK has been extremely successful. There is great satisfaction on both sides. This is evidence that Skype is an opportunity rather than a threat to carriers. Skype users are clearly much more active communicators than non-Skype users.”
Whether or not this proves successful will depend on the execution but the reaction from competitors.
My gut feel is that this wouldn’t help much. There will be a telco offering more data bandwidth and speed vs more voice. This would shift to a market where all 3 telcos earn lower ARPU.
The greatest threat however comes from VOIP over WIFI:
As the report points out, there seems to be the beginnings of a distinct softening of relations between VoIP providers and big mobile operators of late, with a view to developing mutually beneficial arrangements in the transitional period.
But as the report also points out, the biggest ‘threat’ to operator voice revenue actually comes from WiFi.
“WiFi mobile VoIP is potentially the most damaging of all VoIP traffic as it bypasses the mobile networks altogether,” says Anthony Cox, Senior Analyst at Juniper Research. “We forecast that mobile VoIP over WiFi will cost operators $5 billion globally by 2015.”
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