Mobile VoIP means business

The technology has so far been aimed purely at consumers, but mobile VoIP is poised to prove its potential to the business world
Written by Avi Shechter, Contributor

VoIP has become an accepted means of communication for consumers and businesses alike. Most enterprises of a reasonable size have either begun to integrate VoIP in some form into their network, or are planning to do so in the near future. Likewise, Skype, Vonage and their ilk have made the transition from early adopter to the mainstream.

The rise of VoIP is perhaps best reflected in BT's mass-market Fusion product, which brings VoIP into the home in a user-friendly package. And only last week, IDC reported a quarterly increase of 15.7 percent in enterprise VoIP shipments in Europe.

So what does 2007 hold for the telecom industry? 2006 saw a raft of small (and some large) companies take tentative steps into the mobile VoIP (mVoIP) domain. Mobiboo, jajah, Truphone, fring and others are all touting mVoIP solutions. Mainly because of the slight difference in call quality, these have all been pitched firmly at the consumer so far, but 2007 will be the year these services become robust enough to attract the attention of SOHO businesses and perhaps even larger enterprises.

Mobile communications can be a huge drain on corporate resources, particularly with a workforce that spends time travelling abroad. For many organisations, it is accepted as a necessary evil — as long as there is no alternative. For mobile operators, the enterprise market has been a cash cow that has offset declining consumer voice revenues. However, the advent of flat-rate data plans, combined with evolving mVoIP technology, has the potential to undermine the enterprise and consumer markets for voice calls.

Mobile operators know this — and fear the consequences. They can take one of two options: either try to block VoIP on their networks, or embrace it as a way to attract subscribers and introduce new revenue streams. T-Mobile took the former approach earlier in the year, when it rattled its sabre about blocking VoIP on its network; it soon climbed down, but one can understand its wariness. In contrast, 3 has signed up Skype and this month launched its new X-series package, which includes a fairly impressive VoIP element.

Nevertheless, even 3 will be threatened by the new wave of mVoIP players, because it cannot afford to offer restriction-free VoIP services. Newcomers can and do, although it is worth noting that mVoIP players can come with their own drawbacks. Many rely entirely on Wi-Fi connections, which are still patchy and tether users geographically. Others compromise the user experience with a combination of VoIP and "call-back" technology to complete the call.

The type of VoIP service that poses the most significant threat to mobile operators is one that provides a true peer-to-peer connection relayed over the 3G data network. This requires no PC, Wi-Fi connection or additional kit and can use subscribers' existing flat-rate data package to communicate over VoIP. Currently, the quality may not be good enough to hold a mission-critical business call, but it can certainly enable a social conversation. And as the applications become refined and 3.5G becomes more widespread, there is little doubt in the industry that such services will become a primary means for social communication and even viable for the enterprise.

It seems that, just as 2006 saw VoIP enter the mainstream, 2007 will see mobile VoIP make serious inroads and begin to disrupt the conventional mobile telephony model. Traditional operators will have to embrace this trend rather than ignore it, because one thing is certain: mVoIP is here to stay.

Avi Shechter is chief executive of fring and a former VP at AOL

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