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22
Mar
2010

Mobile VoIP represents the "death of distance" for the mobile operator

POSTED BY Global Administrator
There was a time when a long distance call on the mobile for any length of time was tantamount to financial suicide- well not quite, but you know what I mean. Though international mobile calls can still be extremely pricy, call rates are coming down all the time- and mobile VoIP already lets the technically savvy call on the mobile for the cost of a local call, providing you have the right data plan and software on the mobile device.

It may be early days for mobile VoIP, but not that early- and if regulation of roaming and interconnection rates combined with competition have bought down international calling rates already, just wait to see what mobile VoIP can do. Mobile VoIP represents the "death of distance" for the mobile carrier, something that their fixed line counterparts have had to get used to over the last 10 years or so.

VoIP operator Skype, which, according to Investment Bank Morgan Stanley, would be the largest operator in the world for fixed traffic if it were classed as a standard operator, is looking to the mobile market in a big way and via three different avenues.

That is, through operator alliances, handset manufacturer hook ups and application store launches. All three routes to market will have serious implications for the standard mobile operator.

And the most significant is likely to be the App. For the mobile operator its only a question of time before Skype's mobile VoIP app is available on the 3G networks, and the WiFi version must already be eating into operators "circuit switched" voice revenues. The take-up of the mobile Skype app could happen very quickly too, given the number of users it has already worldwide using Skype on their PCs.

So what should mobile carriers do? One of Skype's routes to market seems to provide one answer, at least for the short to medium term. Research into the market by mobile operator 3, Skype, and a third party research company suggests that, for the mobile operator the benefits of an alliance with a VoIP operator are several. They are also unexpected. They include significantly increased voice revenues, better margins and reduced churn. Interestingly, the relationship between Skype and 3 has resulted in the creation of a hybrid IP and circuit-switched Skype solution that can be used by mobile network operators.

Sure Skype represents a threat, but it may be worth looking at the short to medium term opportunity too....