Skype's mobile dreams

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"Initially, people thought they could shrink down a VoIP client, put it on a phone, and run it over a 3G data channel," said Mark Jacobstein, CEO of iSkoot, the company that partnered with Skype to help it run its application on 3's network. "But 3G offers a much smaller pipe, so it just doesn't work that well."

High-speed Wi-Fi networks provide a good alternative to 3G. But these networks are deployed only in limited areas, and switching between a Wi-Fi and cellular network is still pretty clunky. WiMax and other 4G wireless network technologies like LTE (Long Term Evolution) could provide an even better wireless broadband alternative, but they're still years away from being built.

Economics surrounding voice over IP could also slow adoption. In the broadband market, VoIP services like Skype became popular because they provided a cheap alternative to long distance calling, especially for international calling. While international mobile calls can still be expensive, operators also offer subscribers discounted international calling plans.

AT&T users can subscribe to a $3.99-a-month calling plan that gives them discounted rates on international calls that are comparable with those charged by VoIP services. For example, an AT&T international plan subscriber can call a mobile phone in Austria for as little as 26 cents a minute. This is roughly the same price charged by SkypeOut and Vonage, another popular VoIP service that is not currently available on mobile phones.

Angling for an opening
But Skype's biggest hurdle could be the operators themselves, which in the mobile market determine which applications are tightly integrated into the handsets on their networks and which are not. With carriers still generating about 85 percent of their revenue from voice, according to Forrester's Golvin, most operators view Skype and its VoIP brethren as competitors rather than partners. And as a result, some carriers, such as AT&T, prohibit users from using Skype clients or any other peer-to-peer software on their mobile data networks. There are, however, some signs that these restrictions could be loosened.

"For several months now we've allowed customers to download VoIP clients and to use VoIP services on our network," said Jeffrey Nelson, a spokesman for Verizon Wireless. "So people can use Skype if they want to, but we aren't interested in allowing competitors, including Skype, to advertise to our customers through short codes that go over our network."

Despite all the barriers, Skype sees an opportunity too large to pass up. There are roughly 3 billion cell phone users in the world today, which is about three times the number of people who own computers.

What's more, Skype's functionality dovetails well with what sells in mobile. Despite all the hype around mobile operators offering music downloads, mobile games, streaming video, or even data feeds like those for weather, the biggest revenue generators for mobile operators are voice and SMS text messaging. Skype's service, which offers voice calling, IM messaging, and presence information about potential contacts, addresses the biggest money-making portion of the market.

Skype intends to play up its messaging and IM platform to attract partnerships with mobile operators.

Meanwhile, early Skype phone users on Hutchison 3's network are using the presence feature to see if friends are online or not before making a call, said Skype's Saigh.

"Conversations that we enable on 3's network are incremental," he said. "These are conversations that otherwise wouldn't have happened. People can see if their friend is available and then just click to call. So while cheap international calling is part of the story, it's not the main driver for using the service."

It should be noted that the Skype phone on 3 allows calls only to other Skype users, and the SkypeOut and SkypeIn services are not available, which limits the usefulness of the application as a cheap calling alternative. But Saigh still emphasizes that Skype's larger opportunity is in becoming the application that aggregates all communications--voice, IM, and presence information--on a PC and mobile phone.

Of course, Skype is not alone in trying to become the dominant player here. Not only could the carriers themselves try to build more-sophisticated applications that address this market, but other players like Google, Microsoft, and Yahoo are also pushing into the mobile market with their own communication tools. The advantage Skype has is its existing 246 million registered users, which could easily migrate to mobile too.

"Skype's move into the mobile market is a strategic one at this point," said Golvin. "It could be three to four years before these applications are really useful, given today's networks. But it's very important for them to try to emerge as the default for how people communicate, whether it's on their PC or on their mobile phone."

 

Correction: This story initially misstated Skype's CES announcement about the Sony Mylo. Its software will be embedded on the new version of the Mylo COM-2. Skype software had already been available on the Mylo that was launched in 2006.

[chonnom]

what a larf

It would be nice if they perfected their PC software first. Starting from about 6 months ago, I became unable to call cell-phones in Japan. After repeated tech-support e-mails, I got this little gem; "Skype currently does not support calls to Japanese mobile phones" to which I responded that until shortly before they did....no answer.

[timkilroy]

Not Much To See Here

http://www.mobileambition.com
So, really, what is the big to-do here? I'm down with Skype. The service is cool. The technology is cool too. But, truly, truly, truly when is the last time you thought about the cost of making a long distance phone call? Domestic calls are virtually free (or, really, the cost is disguised) and international calls are plummeting in cost. (Although roaming calls and international long distance are still a huge profit center for the mobile industry.)Mobile Skype doesn't relieve you of any burdens. While you are traveling, you must either be paying roaming data rates, or be using a data plan. If you are using just Wifi, then it really isn't mobile, but rather portable...Mobile Skype may be cheaper than using voice minutes, but you give up the reliability of carrier voice connections. If you are traveling abroad, you will likely be using Wifi and a PC will be just as good an option.No real story here, although the VOIP guys want you to think there is. (As a disclaimer, I love VOIP. My home phone is VOIP, my office phone is VOIP, but they are relacements for traditional services, whereas mobile Skype will be an add-on service on top of your usual monthly voice/data plan fee).If we can get true mobile service without a carrier agreement, then that would be a story.

[manheru01]

mobile voip

i heard recently that there is a british company called vicci which seems to have a revolutionary mobile voip product on the way, wondered if anyone else has heard about it?

[Lets Succeed]

What's News...

I totally agree! A new plan, on top of a plan, especially when they come only with two-year agreements (or the likes) is NO DEAL. I too use VOIP in my home and office (not thru Skype) via my pre-existing telephones which are portable but not truly mobile. With the capability to transport my DTA box anywhere in the world and plug it into any internet and any pre-existing telephone and make calls to any mobile, land line or voip phone, as well as receive incoming calls when someone dials my home or office number (no matter where in the world I am) for no additional charges; THIS is still more news worthy and impressive, in my opinion.

[Stating]

Your Own Custom PBX

Skype has an opportunity to expand the service to support customizable PBX-like functions like find-me-follow-me, greetings based on caller-id, call actions based on time-of-day, etc. The API could expose new functionality, allowing independent software companies and handset makers to exploit the functioanality.

I have a makehift find-me by forwarding unanswered Skype calls to me cell phone, but it doesn't have the kind of flexibility I really want. It's cool though, an incoming call rings all my Skype phones wherever they may be -- home, work, etc. If I'm in the field then it rings through to the cell.

[hadaso]

The problem with mobile carriers is ...

The problem with mobile carriers is that they are providing and controlling both the pipes and the content going over them.

With the internet it's different. ISPs provide the pipes. Generally any IP protocol traffic can get through. So it's a good environment for developing applications. They only have to adhere to the standards to work.

With mobile providers it's different. They just have to limit anything that go over their networks. There is little sense in developing applications for this environment unless you are very big and you can secure in advance agreements that your applications would actually not be blocked. A lot of the development you can have on the internet you just cannot have in this environment. It's focused on providing one size fits all things for the lowest common denominator of audiences.

There is also little sense in buying mobile based technology unless you know you absolutely need it or you have lots of spare money when you know that the limitations are not just technology but also artificial limitations your provider puts on applications you can use just so you cannot use the resources efficiently (that is forcing you to use the resources less efficiently to do what you need to do so they can charge more).

There's a conflict of interest between the selling of connectivity and the selling of content (particular services) and as long as no regulation separates these two and opening mobile networks by requiring that they allow all kinds of data that adhere to basic communications standards (like ISPs allow any protocol over IP protocol) we cannot expect these networks to develop in the same way the internet does, and a ten word SMS message would cost the same as sending an email message with a million times more data on the internet.

[emerson direct]

tip of the iceberg

This is merely a precursor for what will eventually be a world where we all carry a laptop the size of a cellphone. It will have all of the functionality and be twice as fast. It's coming.