Skype

Google and wireless regulation in the U.S.

There’s more debate on the smartphone VoIP front as both Google and T-Mobile deny there were any deliberate restrictions placed on Skype for the T-Mobile Android handsets. Google said there was no full-feature Skype implementation offered as yet for Android, and T-Mobile said it had put no pressure on Google to restrict VoIP applications.

All of this stems from the fact that Apple limited iPhone Skype to WiFi connections and blocked Google Voice (for, said Apple, reasons of lack of support for the iPhone’s distinctive GUI). We think these issues may combine with the Comcast net neutrality appeal to create some momentum for legislative intervention, though the FCC may also look into the matter. If the FCC takes action, it may help uncover just what basis the FCC will claim for regulation of net neutrality issues; the net neutrality principles published by the FCC were not part of an order and thus have no direct legal status.

BT sends signal on future voice services

A securities analyst has reported that BT may be slow-rolling 21CN and may in particular be rethinking its notion of migrating from TDM/PSTN voice to VoIP, at least in the near term. The information came out as it related to the impact that a VoIP cutback might have on Sonus. Obviously it could be significant.

What could be more significant is why this might happen. On one hand, the TDM plant is more depreciated than ever, and so barriers to replacement are falling. Yet there’s nothing as cheap as something you own that has no residual value to write off against your top line. Balanced against this is that operating costs for aging equipment typically grow. So at some point, you must assume BT would have to change.

The most logical starting point here is that it makes no sense to do something that involves TDM-to-IP conversion; you are forced to invest in the gateways. But if you have any TDM circuits, you can’t avoid that. Thus, we think that the likely issue here is a migration to packet voice for wireline and wireless, eliminating circuit technology in one sweep.

That would imply, in our view, that BT might synchronize three things before moving forward: 4G/LTE, FMC/femtocells and wireline migration to VoIP in some form. The question is what form. There are indicators that a P2P voice model, or at any rate something other than a SIP model, might be cheaper to deploy. Given Skype would likely offer voice services on any OTT-ready smartphone and over all home broadband, it makes no sense to spend a lot on your own voice program; you will have to match the Skype price or lose.

Wireless Internet: Should “net neutrality” apply?

The FCC is being asked for a ruling on whether its net neutrality principles apply to wireless Internet. This step comes after AT&T limited the use of Skype on smartphones.

There will be a lot of interest in the FCC’s response. On the surface, the issue seems clear to us. The FCC has said before that the service matters, not the technology. On that basis, it would appear that the four net neutrality principles articulated by the FCC would apply to the Internet, period.

On the other hand, is wireless broadband the same “service,” and the question is, do the rules (promulgated in the context of a wireline access order) really apply here? The risk for operators is that OTT players can use Internet access to bypass core services like voice, yet the market is moving to a one-price-for-all mode anyway. We think AT&T will lose this one and probably should not have fought in the first place.

Skype and the enterprise voice connection

Skype is testing a new client that will allow Skype calls to be made from corporate phone systems using, we’re told, a SIP-to-Skype gateway that would be compatible with the VoIP used by most businesses.

This would let businesses bypass traditional telephony for expensive calls, especially international ones, and it would also put further pressure on the more traditional VoIP/IMS model for next-gen voice services by setting a very low floor price.

At some point, telcos will have to face the fact that net calling may not be perfect, but the price is right, and users will take time to try a couple of cheap options before they fall back to more expensive service options. Thus, telco long-distance voice at a premium may be the choice only if nothing cheaper works, and that will erode the value proposition considerably.

Over-the-top VoIP: Comparing Google and Skype

Over-the-top (OTT) voice over IP may be finally coming into its own, driven primarily by a desire to make cheap international calls. In its last earnings call, eBay reported good numbers for Skype, which has so far failed to create any of the often-touted symbiosis with the eBay core business.

Google has now entered the space in the UK and has included a text-to-speech feature for email. The success of Skype and the entry of Google are both centered on international calls, where the pricing difference versus standard voice is compelling. Google is taking a different tack than Skype. In the first release there’s no video or IM, and the service isn’t tied to a computer. You call a “service number” from which you can pick up voicemail and also hit a key to get dialtone for a new call.

We’re hearing that Google is marrying this service with Android, and that Google is even considering having “smart” dialing based on whether a given party is in the VoIP or traditional calling zone. This is all part of a drive by Google to get stronger in the mobile space, and it will help the company accumulate presence data.

All of this will put tremendous pressure on carrier voice offerings when Google expands the base worldwide, something likely to happen within a couple of months.