Has Mobile VoIP Hit a Tipping Point?

Voice over IP (VoIP) has long been a problem area for telecom carriers. Since VoIP allows voice calls to be routed over the Internet, it bypasses the carrier's PSTN network and any revenue they might otherwise receive. Carriers took a first step by supporting landline VoIP service to homes, small businesses and enterprises offering all the cool features made possible with a packet-based voice solution (e.g., combined high-speed Internet access, TV and voice service, click to call from your TV, PC-based management of voice mails and call preferences). AT&T's U-verse Voice and Verizon's FiOS are two examples of VoIP offerings.

Mobile VoIP extends IP-based voice service to mobile phones. And here's where the conflict for carriers gets interesting. Wireless revenues are growing while landline voice revenues are shrinking. As a result, carriers have not been too eager to offer mobile VoIP service that could cannibalize a lucrative and growing wireless market. In a related development, the cable companies and large Internet services like Google and EBay started a discussion around "net neutrality" in 2005 after the FCC phased out rules requiring traditional telecom carriers to share their broadband networks with competitors. That same year, the FCC approved four informal net neutrality principles, but broadband provider Comcast, in a lawsuit, has challenged the FCC's authority to enforce those principles. Just last week, the FCC decided to open the rule making process around net neutrality, inviting industry comments around a new net neutrality proposal (Reuters, Oct 22). Under the FCC proposal, wireless broadband services would be included in the net neutrality rules. The idea being that such rules would preserve the innovation and openness that has allowed the Internet to be successful.

With the threat of FCC action in the background, it's been interesting to watch the flurry of announcements coming from carriers recently:

Oct 6: Verizon announces strategic partnership with Google. Although not in the press release, the plan is for Verizon to support Google Voice, Googles VoIP app, on the new Verizon Android devices.

Oct 6: AT&T extends VoIP to 3G network on iPhone. AT&T has provided VoIP support on iPhone but only on Wi-Fi networks. Other devices have had VoIP support on AT&T's 2G, 3G and Wi-Fi networks for some time. This announcement opens VoIP access to millions of iPhone users.

Oct 12: Sprint offers VoIP solution to wholesale customers. Allows VoIP providers to leverage Sprint's IP network for delivery of enterprise-class VoIP services.



Businesses certainly see the benefit of mobile VoIP solutions, likely from a cost-reduction standpoint. Below is a chart from IDC's report "The Importance of Security in Corporate Mobility Solutions" (February, 2009). In a survey of CIOs, mobile VoIP ranks 4th as a key reason for investment in mobility solutions.






Around the world we're starting to see other carriers open their networks to mobile VoIP. Telefonica's O2 Germany announced support of VoIP on mobile phones August 17 in a move that puts pressure on resistant local leader Deutsche Telekom.



With continued pressure from VoIP players and device vendors, as well a cost-conscious public, we can expect that more mobile operators will open their networks to VoIP. The deployment of 4G networks such as WiMAX and LTE, which hold the promise of greater bandwidth and richer services, will only increase the attractiveness of such services, making continued mobile VoIP restrictions a challenging long-term strategy.