Skip to content

Mobile VOIP: Is voice as the killer app making a comeback?

Two of the sharpest minds in the wireless industry, Ajit Jaokar of Oxford University and Chetan Sharma of the consulting firm that bears his name, have written an excellent report on mobile VOIP and argues convincingly that mobile VOIP is near the tipping point, i.e. the point of adoption which makes it take off in rocket speed.  Recent acquisitions by Telefonica of mobile VOIP company JahJah for $206m may indicate that they are not alone in thinking this, and they make a strong case against GigaOm’s earlier gloomy predictions.

Since their report was sponsored by Skype, it therefore deserves some scrutiny. The report makes a very good case on several levels.  Some of the argument presented agains mobile VOIP is that it will cannibalize operator voice revenue, thus is facing an uphill battle.  Well, there has been resistance for sure, but the premises are changing:

  • Telefonica’s recent purchase of JahJah and British Telecom of Ribbit in 2008 proves attitudes are changing among operators. Verizon just opened up to have Skype clients on their phones in case there was any doubt about this.
  • Numbers from H3G in the UK show that mobile Skype users generated almost 60% more voice revenue than non-users, Skype users spent 33% more on SMS than non-users, Skype users were 100% as likely to hold on to data add-on, and regular Skype users churned 14% less compared to non-users.
  • Flat rate data plans are growing rapidly, operators are becoming smarter at structuring them, and realizing that the bitpipe portion of what they do is not so bad.

Another argument against mobile VOIP is that the networks are not good enough to support it. This is simply not true. Sharma/Jaokar shows that mobile VOIP actually uses less data than browsing:

This is where Sharma/Jaokar neglect one issue though: networks are already congested.  Uptake is driven by video watching (which is the hightest bandwidth hog) and general growth in smartphone uptake and data plans.  This could be a major hindrance for mobile VOIP, as this usage steals bandwidth and callers may experience delay, poor quality or dropped calls. While you may accept this because you are saving money while talking to grandma, it will certainly rule it out for business calls, unless you happen to be in a city with a vast density of cell towers and you are prepared to not move around too much when you have your call (which does make it slightly less “mobile”).

However, investments into higher speed (4G, LTE, Wimax) networks are being made, and technology that allows seemless switch between wifi, mobile, wimax etc, but this will take some time before it is universal.

Then there is the question of whether voice is a killer app?  Or will it fade away as the research in Ireland mentioned in the report which showed that teenagers resort to voice as a last resort, after Facebook messages, tweets, sms or IM is exhausted (notice that email has been purposely left out here). Personally I am going the other way as I found that electronic communications simply fails to capture the context which is so important in a business setting. Then again, it has been a while since I’ve been a teenager…

Voice may definitely be making a come back as a communications channel, but also as an interaction tool. Services like GetFugu (see left) and I suspect very soon Google Voice Search uses voice as the trigger for search and for brand interaction.  Do not be surprised to see voice search integrated into Google Voice as well  (no, I do not have insight into Google’s development plans, but this would be what they say an educated guess about what Google Voice is really about…).

The real opportunity here definitely lies within the aspect of multichannel communication. Google Wave can perhaps be construed as a half hearted attempt (yes, I am not a convert — yet), but since they acquired Gizmo5 and launched Google Voice you know they are serious about it.  Other players, like Orbit are trying to create app centric multi communication/feed experiences. The service is still crude, but getting there.

If I can merge my phone book with my facebook list and LinkedIn contacts (honestly do not need Twitter followers, I’ll leave that for online marketers and social media “experts”), with VOIP, SMS and their respective messaging facilities – all in a user friendly interface, which can run in the background on my phone and my PC – then we have something. Interested VCs, please just get in touch :).

Posted in The Business of Mobile.

Tagged with , , , .