voice

Policy clues surface as FCC hits its stride

The FCC is hitting its stride in regulatory policy terms, primarily relating to the issues of next-gen voice. In one matter, the FCC has already asked Google for specific details on Google Voice, in response to AT&T filing a complaint that the service was really a regulated voice service and was discriminating against open call routing to exchanges with high reciprocal compensation rules.

Now the FCC’s chairman is making it clear that his FCC thinks mobile services are the really hot regulatory issue. Genachowski applauded the AT&T decision to open its mobile network to VoIP services and the Verizon Wireless partnership with Google. He still feels that mobile services aren’t necessarily as competitive as the FCC would like. The knotty issues for mobile are the application of net neutrality and the question of open handsets and handset subsidies.

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.

Global broadband to become universal service?

Worldwide broadband subscribers have reportedly passed the 400 million mark, and some telco planners are now seriously looking at broadband as their “dialtone” service in both wireline and wireless—but beyond 2011.

The decision to move to a universal broadband delivery would increase capex, but it is apparently being driven by the cost of the dualistic voice/data structure that is now in place. The barrier is monetization of broadband, which has lagged expectations for both wireless and wireline. Operators believe that additional capital and operational savings are also likely to be necessary. We provide some insight into current operator views of the future in the next issue of Netwatcher which will be released this weekend.

New Spec for Voice over Cable

CableLabs is releasing a new version of the PacketCable specification used for voice services over cable. The 2.0 release will include support for business features and also support for IMS-based FMC, presumably to support either a cable company push into wireless or an MVNO relationship with a provider like Sprint. The move is likely to be linked to the recent reports of FMC activity at AT&T and Verizon, and it may thus be an indicator of a broad industry trend toward convergence of wireless and wireline voice. As we have noted many times, however, it is far from clear that such a convergence would necessarily create IMS momentum.

Cable/Telco Competition Rests on ARPU

Business Week and S&P are now publishing reasonable analysis of the cable/telco competition. The recent work concedes that cable will likely take some market share from the telcos in voice services, but that telcos will take share in both data and video services. As we’ve said many times, it’s better to be stealing customers with high ARPU than those with lower ARPU, and wireline voice services are clearly not going to be profitable for long, as Skype and Vonage show. Another problem for the cable operators is that the competition with satellite and telco video will likely force them to increase capex and reduce pricing. The current cable voice popularity is driven in part by bundle pricing that the cable companies had hoped to raise at the end of the contract, but it seems likely that such a move will not only increase churn but also create media awareness of the relatively high cable voice cost. Finally, fixed-mobile convergence is now arriving with bundled wireline/wireless services from AT&T and Verizon, and it’s likely that both companies will soon introduce active convergence at the feature level. This will force the cable companies into either partnership (which is what Sprint hopes) or capitalization of their own mobile services. Either way, their ROI will suffer.