Voice and SMS over LTE

Video calling over LTE brings promise of fresh revenues

I must admit I was a bit stunned when I read the headline for this article in Total Telecoms.  

I believe that Skype and Facetime have set the bar pretty high for video calling – works great, costs nothing.  

So where are the ‘fresh revenues’ going to come from?

The article points out that, to date, mobile video calling has failed to achieve widespread popularity “…for a number of reasons, including doubts over quality, prohibitive costs to the user, incompatible devices and a perception that consumers aren’t interested in it.”  

But Leslie Ferry, vp of marketing for IMS vendor Broadsoft, claims that Skype’s success shows “there is such a demand in the market for these services.” 

Perhaps there is demand because Skype has overcome the negatives listed above…

• Skype’s drive to provide the highest quality over packet networks is admirable.  
• Certainly one can’t beat Skype’s price point – free.  
• Given Skype is available on the iPhone and Android 2.2, plus RIM and Nokia, plus every PC platform available, I think it’s fair to say they have overcome device compatibility.  
• Consumer interest… that’s a tough one, but making it free, available everywhere and with good quality should spur whatever demand there is.  

I struggle with how mobile service providers are going to be able to compete with the likes of Skype and Facetime, both of which seem to have an insurmountable lead today, even with Broadsoft’s undoubtedly advanced IMS-based video calling solution.  

In a world where billable minutes of use is (was) king, the fact that competitive video calling services are priced at zero (even less than regular cellular calls), will make it difficult to charge anything, let alone a premium.

Even in the brave new world of bits, bytes and data, where services are just packets flying over the network, I think it will be difficult for operators to actually construct a viable video-calling business.  If the bar is set at $0.00/minute for video calls between clients on the IP network, is this a loss leader?

Are mobile operators planning to invest tens of millions of real dollars to develop a video calling service they are going to (be forced to) give away? 

Undaunted, Ms. Ferry goes on to say “In any market there are always going to be new entrants” and while mobile operators can take advantage of their broad base of subscribers, “over the top guys have to start from scratch.”  

With Skype pushing 700m registered users, nearly $1 billion in revenues, and ~40% of minutes (calls) include video, it seems to me that Skype’s been scratching along for quite some time.    

 

iPhone 4 - video calling support

There has been a lot of fervor about the alledged "lost iPhone" in the press recently.

However, I think this follow-up article by Gizmodo is very interesting. Certainly, we've already heard that the new iPhone OS 4 adds new capabilities to support VoIP. But this article suggests that the new iPhone hardware may support a front facing camera needed to do video calling.

Video calling has been tried and flopped many times before, which is usually the kind of challenge Mr. Jobs  looks for.

Just putting a front facing camera on a phone isn't enough to 'support' video calling. The subscriber is now holding the phone away from their head, so it's either a very public speakerphone situation, or the subscriber needs to have a headset. Next is the issue of who to call and how.

Mobile operator-supplied video calling services were burdened by several issues:

- First, subscribers needed a video calling phone. While cool, they weren't overwhelmingly compelling. And, they required you and the person you wanted to chat with to get the same or similar 'supported' phones.

- Second, there was little (or no?) cross network compatibility. There are many issues to delivering video streams between unique network providers, especially when the service lives inside the walled garden.

- Third, there was little (or no?) support for non-mobile devices. The most prevalent video calling is desktop based today. The service should certainly interconnect with those desktop apps.

So basically, there were plenty of reasons for operator-based video calling to struggle.

Now along comes a potentially new iPhone. IPhones are compelling and people will get them regardless of support for video calling (overcoming issue #1). Assuming, as they do in the article, this video calling service is via iChat or Skype, the service won't be restricted by a walled garden, making cross network connectivity easier. And certainly if iChat and/or Skype are supported, the ability to connect to desktops will also be supported.

But I think this also addresses another unspoken issue with video calling... I really don't want to pay extra for it. Mobile operators are in the business to generate revenues. A massive investment in a new service with dim prospects on a return of that investment are not part of the business plan. But, if they tie in to free services like iChat and Skype, I think consumers might actually use it.

Will Mr. Jobs succeed again in giving us something we really weren't sure we needed?