How and why mobile carriers focus on their current revenue model too much and why this will lead to missing out on the emerging global VoIP market.
As you might remember, VoIP technology was initially used on desktop computers only. When these PC-to-phone applications like Skype came out, there were devastating problems for established telecom businesses. The uprising of Wi-Fi and 3G bundled mobile phones are creating a market that did not exist before. Actually, mobile VoIP created a need of which the late majority of customers are not aware of yet today. (Philosophical, I know)
Mobile carriers should embrace VoIP solutions to avoid competition on this emerging market. In practice, they have to alter their income streams from operating calls to data plans. Embracing mobile VOIP would avoid entrepreneurs to take over the market in the future. Instead, mobile carriers are suppressing the use of VOIP on mobile phones. However, mobile VoIP users are emerging quickly, “analyst firm Disruptive Analysis suggested ‘VoIP-over-3G’ would grow from zero to 250 million users worldwide within five years.” The reason why mobile operators are still neglecting this market are general for many cases of disruptive innovation.
The switch to VoIP is imminent; today we see a trend of ‘ordinary’ mobile phones running Blackberry OS, Windows Mobile and the Iphone OS. However, product legislations, buggy software and a high learning curve prevent it to be a mainstream product yet. Examples of software include Skype, Voipbuster, iCall and WQO.
Google announced that their mobile platform Android would not support any VOIP applications. Other example of legislated protection of market is the disabling of VoIP telephony by carrier Vodafone; something that goes against most of the market based economic systems, competition laws ensure and promote competition. Truephone sued Vodaphone in 2007 for blocking VoIP services.
The customer does not know what they want and management is measuring the wrong things to maintain their leading position. In the mobile VoIP example, there are four big reasons for carriers to neglect the market:
- The management of most leading companies have to much at stake – and are too stubborn to embrace a new core business. It requires a true visionary to make such a radical switch.
- For Dutch operated KPN telephony, operating mobile telephone calls accounts for 66% of the turnover. This reliability on income from mobile telephone is similar at many big mobile operators, implying that the global tendency to maintain the operating market is liable. Changing the main income stream would put tremendous
- Customers are fine with paying to call, simply because they are not educated yet.
- The introduction of VoIP might not cover current data plan pricing since the competitive priced income on data plans might not cover license costs and will adjust profit expectations in the future.
- Shareholders of the carrier operators will insist of focusing on the ‘cash cow’ of the company.
It is only a matter of time before an entrepreneur sees the obvious advantage of reduced costs for customers and decides to launches a mainstream VoIP product that will compete with the core business of established mobile carriers. Hutchison Whampo was mentioned in Business week to launch the INQ1 ‘web phone’ for less then $50. Apple’s iPod touch has become a serious threat to the iPhone with simple software. Mark my words: Mobile carriers who fail to bring a decent and cheap alternative to their expensive mobile platform will lose competitive edge in the next four years.
[For quotations and background, read the full article]
Wow Joop, this should be THE standard piece about the interesting mobile revolution which is going on as we speak!
By the way, I use Truphone for calling my girlfriend in India. I guess it has saved me around 50 euros in just two weeks.
This is spot on. It doesn’t take an oracle to see that everything will be over IP in the near future, and if the telecoms and mobile operators don’t want to become like the “little plastic disc” (i.e. music) industry they need to realise this and focus on their IP networks instead of trying to stop the inevitable. Their customers in the future will not pay by the minute but by the megabyte. In short, they will have to become ISPs.
pay by the megabyte?? who wants that??
This is an excellent piece. Thanks for writing it. We will all wait for the insightful entrepreneur.
It also was good for exercising the correction program.
First of all i would like to appreciate this effort by Joop as it will help many people to know about mobile VOIP technology.
The calls from landlines are becoming so expensive that customers like me cannot even think of making international/long distances calls.Thanx to this new VoIP technology which is making it possible to call so cheaper that now we can make long distance call with out thinking too much about its cost even from our mobiles.
Now we can make cheap international calls from our mobile phones..thanx to mobile VoIP service providers.. New technologies like mobile VoIP are bringing many facilities for customers like me who live abroad and need to call their family n friends back home oftenly..) I have heard a lots of good things about mobile VoIP, but also heard from my friends who have been using VoIP from quite some time that some service providers have cheap rates but not good quality some have support issues etc. Having said that they still believe that using a good VoIP service provider saves a lot of your money on daily phone calls whether it’s a local or an international calls or sending SMS.. So I am also thinking of permanently switching to some good mobile VoIP service. Last week I happen to try this new service called http://www.vopium.com on my Nokia 2610 as they provide you with 30 free minutes to test their services. At first I felt there was some distortion but as i continued it faded, and then I talked for about half an hour with my family and friends back in my home country without worrying too much about my pocket…I am very great ful to this new mobile VoIP te4chnology..cheers :-)