Vonage World Mobile Launches

Users of the iPhone, BlackBerry and iPod touch can subscribe to Vonage World Mobile, a new global calling feature available for "Vonage Mobile," Vonage's mobile calling application. Vonage World Mobile provides customers with unlimited mobile international calls to over 60 countries for one flat monthly rate when calling from their mobile device.

The service works on cellular or Wi-Fi (iPhone), just Wi-Fi for the touch and only using mobile spectrum for the BlackBerry.

Current Vonage World residential customers will receive a 40 percent per month discount on their home service when they buy Vonage World Mobile.

Vonage World Mobile costs $24.99/month and is available as a free download at www.vonage.com and the iTunes App Store.

Good News for VoIP, Bad News for Wired Telecom Providers

"VoIP" was the "industry of the decade," according to IBISWorld, which says the industry earned that accolade because of its 1,655 percent growth rate between 2000 and 2009. IBISWorld notes that VoIP, as a new industry, only began to earn any revenue in 2002, so it is starting from a "zero" base.

Wireless telecommunications ranked eighth for industries of the 2000 to 2009 period, posting revenue growth of 183 percent.

IBISWorld also predicts VoIP will show the most revenue growth in the coming decade as well, growing 150 percent between 2010 and 2019.

The bad news for the 2010 to 2019 period is that wired telecommunicatons carriers will show negative 52 percent revenue growth. Telecommunications resellers likewise will show negative 26 percent revenue growth over that same period.

FCC Seeks Input on Transition to VoIP

The Federal Communications Commission wants public and industry comment on the policy framework for a transition from circuit-switched to voice services on all-IP networks. The FCC will use the comments to issue a possible "notice of inquiry" on the subject.

"In identifying the appropriate areas of inquiry, we seek to understand which policies and
regulatory structures may facilitate, and which may hinder, the efficient migration to an all IP world," the FCC says. "In addition, we seek to identify and understand what aspects of traditional policy frameworks are important to consider, address, and possibly modify in an effort to protect the public interest in an all-IP world."

Among other issues, the FCC will be looking at consumer protection issues such as how the needs of people with disabilities can be assured. A look at the role of "carrier of last resort" obligations in an all-IP framework also is expected.

All comments should refer to GN Docket Nos. 09-47, 09-51, and 09-137 and title comment filings
as “Comments – NBP Public Notice #25."
 
Filers using the Commission’s Electronic Comment Filing System should enter the following text in the “Custom Description” field in the “Document(s)” section of the ECFS filing page:  “Comments – NBP Public Notice # 25."

Mobile VoIP is Inevitable, Yankee Group Says

Flat-rate data pricing has made mobile VoIP applications inevitable, and over time, all U.S. carriers will end up allowing them, says Yankee Group analyst Carl Howe. That, in turn, is going to have profound impact on the mobile service provider business model, as voice now is the key revenue driver.

Some of the effects are easy to predict. International call traffic will migrate to VoIP. In the U.S. market, for example, domestic voice calling minutes are cheap, but international rates are fairly high.

On the other hand, mobile VoIP also will shift international traffic from the landline networks (including use of VoIP from fixed broadband connections) to the mobile network.

Less easily quantified is the boost mobile VoIP will give to purchase and use of specific handsets, and the emergence of specific mobile VoIP user segments. For example, devices with front-facing cameras potentially can become the foundation for mobile videoconferencing services and applications.

If you think of BlackBerries as "email" centric phones, and iPhones as "mobile Web" phones, while other devices are "social networking" or "navigation" oriented, you can see where the niches might be.

It is conceivable that "flat-rate data plan caps will tighten," says Howe. Mobile service providers might try to avoid a wholesale collapse of voice revenue by trying to manage network capacity through through more-stringent bandwidth caps.

The operative word in that sentence, however, is “trying,” says Howe. Data caps and over-cap pricing are likely to receive intense regulatory scrutiny to ensure that operators aren’t gouging customers in an attempt to replace lost voice revenues.

The other big unknown is whether service providers will be allowed to create optional "voice optimized" or "conferencing optimized" service plans for users that want priority handling of their own conferencing and voice bits, or "video optimized" plans for users who deem video apps to be key.

In a sign of things to come, Verizon Wireless and AT&T now allow use of mobile VoIP. Google's Android phones running on Verizon's network have VoIP applications available on them.

AT&T also now allows use of the Skype VoIP application on AT&T’s 3G network and iPhones. Vonage and iBasis, among others, also support mobile VoIP calling.

The VoIP trend actually only accelerates an on-going trend. U.S. mobile service provider monthly voice revenue per subscriber has declined from an average of $58 in 2000 to less than $35 in 2009. VoIP might accelerate that process, but is not singlehandedly causing it.

Data plan revenue is the obvious replacement revenue source. And with more application stores offering mobile VoIP clients, it will be hard to stop users from substituting VoIP for traditional calling. Of course, mobile providers have options.

They might not want to do so, but one way to prevent substantial migration to VoIP calling is simply to lower prices for tradtional calling, especially under conditions where voice is carried on one network, and data on a separate network. Part of the overall equation is the additional load mobile VoIP calling will place on 3G networks. In a sense, providing incentives for users to use the voice network for voice offloads traffis from the 3G networks.

Ease of use will emerge as a key issue as more mobile VoIP clients are made available. For many users, domestic calling is cheap enough that mobile VoIP will not provide much advantage, as compelling as international VoIP will be. Anything other than the normal process people now use to dial calls will create huge barriers to domestic VoIP usage.

Call quality also will be an issue. People are used to mobile voice call quality being less than landline. They are used to VoIP calls being equivalent to mobile call quality. But quality less than mobile will create barriers to usage.

On the other hand, use of high-quality codecs will be an incentive to use of mobile VoIP. Anybody who has used Skype high-definition codecs might have new incentives to use VoIP calling services that offer such experiences. Adoption barriers exist here, as both ends of a circuit must be equipped with high-performance codecs to maximize the experience.

The other unknown is the impact of devices able to support multitasking and integrate data services such as instant messaging and presence functions with voice sessions.

Carriers might want to ationalize data and voice pricing, says Howe. A $30 per month data plan capped at 5 GB a month allows your typical 24 Kbps codec VoIP user to talk for nearly 21,000 minutes. That makes the $60 AT&T charges for 900 voice minutes a month look pretty expensive, says Howe.

Operators should do the math on tariffs they charge and adjust rates so VoIP arbitrage becomes less attractive.

Service providers also should build their own mobile VoIP apps, optimized to work with 3G networks as well as Wi-Fi and 4G networks they also may own. That of course assumes such optimization will remain legal once the Federal Communications Commission finishes its rulemaking on network neutrality.

Hardware Sales Flat, Software up 4.8%, Telecom up 2.3% in 2010, Says Gartner

Providers of information technology solutions likely will have to emphasize customer retention more than customer acquisition in 2010 and 2011 because of a sales environment that will remain challenging, says Richard Gordon, Gartner Research VP. That said, sales of IT hardware and software will grow about 3.3 percent in 2010, about in line with telecom service provider revenue growth of 3.2 percent.

Enterprise hardware sales, for example, will show zero growth in 2010, compared to 2009, Gartner forecasts, in part because hardware lifecycles have lengthened.

Software sales, on the other hand, should grow 4.8 percent, says Gartner.

Net Neutrality Not Good for Real-Time Services?

One of the unknowns at the moment is how any proposed Federal Communications Commission network neutrality rules might affect a service provider's ability to offer quality-assured services.

That's possibly important for any users or providers of real-time services (voice and video), since bandwidth alone is not a guarantee of quality experience.

Real-time services are highly sensitive to latency and delay. The issue then is whether consumers will have the option of buying services optimized for real-time services.

Think of this as an end-user opportunity to buy bandwidth services that are akin to the Akamai content delivery service currently available to businesses.

AT&T Google Voice Complaint Partly About Traffic Pumping

In asking the Federal Communications Commission to investigate Google's refusal to terminate some calls placed to high-cost rural areas, AT&T is not simply sparring with Google over network neutrality, but rather pointing up a pricing anomaly that distorts behavior and reduces carrier profits.

while suggesting current regulatory rules do not fairly treat competitors in the market, and arguing for narrowing the regulatory differences between VoIP and other carriers and between access, application and content providers, AT&T also is highlighting what it and other carriers say is a pricing distortion in the termination rate regime that directly underpins the businesses of free conference calling services.

At immediate issue here is Google's refusal to terminate some calls in high-cost rural areas. Many of you are familiar with free conference calling services that use area codes in rural areas. You might have wondered what the business model is. Simply, it costs carriers enough money to terminate calls in those rural areas that conferencing services can afford to give away the service and make their money on the termination fees.

Over the last couple of years other skirmishes have been fought about high termination rates in some rural areas of Iowa and some other areas.

Services such as Free Call Planet, freeconferencecall.com and others teamed with Iowa telcos to set up inexpensive or free calling services that generate profits for the providers primarily by collecting millions in access fees.

The local telcos provide the Iowa telephone numbers and voice gateways for the services, bill long-distance companies to terminate calls and then pay“marketing fees” to the conference calling services.

AT&T said in 2007 that the arrangements were costing it $250 million a year. AT&T, Verizon, Qwest and Sprint Nextel have opposed the "traffic-pumping" schemes, and the Federal Communications Commission did move to limit the practice.

Rural phone companies are allowed to charge about 2 cents to 8 cents a minute to connect long-distance and wireless calls to their networks. The fees, up to 100 times higher than rates charged by large local phone companies, are intended to offset the rural companies' high costs and low call volumes.

But that's where the arbitrage opportunity arises. Specialty calling services teamed with some rural phone companies to offer free conference calling, adult chat and other services, splitting the call-connection revenues with the rural carriers.

The FCC did move to suspend the rural companies' rates. But new providers have set up shop.

About 160 million minutes of calls by AT&T customers were routed to rural CLEC networks in March, 2008, surpassing the peak level of calls to rural incumbents, about153 million minutes, in January 2007, AT&T says. Sprint told the FCC that its bill from 11 competitive carriers soared 5,000 percent in 21 months.

Recently, even other rural telephone companies have decided they'd better side with the large tier one providers as well, as the practice might damage the wider rural termination regime.

Google tariff specialists know that, and apparently want to avoid those costs by restricting termination to such numbers, as the tier one carriers themselves did until forbidden to do so.

So aside from the other clear issues about treating like entities in similar fashion, there is the outstanding issue of high termination rates in some jurisdictions.

CallVantage Closing Highlights VoIP as Part of Triple Play

AT&T is discontinuing its CallVantage "over the top" VoIP service, a move that has some observers calling AT&T stupid for turning its back on the future. But that isn't what AT&T is doing. It will focus on using VoIP as a key part of its triple-play or quadruple-play consumer offerings, instead of devoting resources to a small, if well-run service that offers little synergy or business value with the other things the company is doing.

It just makes more sense to focus on VoIP as a part of a bundle.

Tweet Shows IP Impact

"The terrible phone connection I was blaming on our VoIP line turns out to be the cordless phone clashing with WiFi," says Matthew Weinberg. "May need to go corded."

That's as good an example of any about the changes IP technology has wrought for service providers, who no longer can simply sell a connection, terminate at a network interface and hand off the premises network and devices to an end user. That generally worked when interface specifications were stringent and the total number of devices and applications were limited.

These days the application and device environment is much more complex. But users will call their service provider when applications or devices don't work properly. One way or the other, greater involvement in premises networks and configuration are required.

Packet 8 Mobile VoIP Trial Program Launched

8x8, provider of Packet8 voice and video services, has launched a no-obligation, no-fee trial program that lets customers of any U.S. based wireless carrier experience the dialing simplicity and call quality of the Packet8 MobileTalk mobile VoIP international calling service at no charge.

Wireless customers can download the MobileTalk application onto their mobile device and use the service at no charge until a total of $2.00 in per minute fees is reached. Packet8 MobileTalk service offers rates of $.02 to $.05 per minute for most locations in Europe and Asia.

Users can dial calls directly and natively from their mobile handset, contact list or speed dial directory without the additional keystrokes required by calling card and other reduced rate international calling services. Once the destination number is dialed or selected, the Packet8 MobileTalk software application identifies the international prefix being called and redirects the call to a local Packet8 network access number.

Over 450 Windows, Palm, RIM and Symbian-based mobile phone models, including the entire family of Blackberry phones running version 4.0 of the operating system and above and 25 Nokia models running the Symbian OS, are supported by the Packet8 MobileTalk service.

The plan requires a one-time $9.99 activation fee for the service and a monthly fee of $9.99 for non-Packet 8 subscribers.

Mobile VoIP is growing, no doubt, as shown by this Sound Track Partners forecast.

Belkin Annunces Skype Phone

Belkin will offer in March a new sesktop Internet Phone for Skype (suggested U.S. retail price of $99.99) that allows users to make and receive Skype calls without use of a PC, plugging directly into a router.

Newspaper, Long Distance: Same Story

The market value of the American newspaper publishers entering 2008 as independent, publicly traded companies has fallen by $23 billion, or 42 percent, since the end 2004, the year before the wheels started coming off the industry, says Allen Mutter, managing partner at Tapit Partners.

The change is akin to similar changes happening in the global telecom business. Some legacy products are in irreversible decline, be that newspapers, wired access lines used for voice, dial-up Internet access or expensive, high-margin stand-alone long distance.

That doesn't mean people aren't "calling," or "reading" or "communicating." But products built on those activities are assuming new form. Newspapers won't disappear tomorrow.

As long distance prices have been in continual descent for decades, so newspaper readership and revenues will simply drift lower. The issue that must be faced is a transition of the assets to new formats and services.

Newspapers are both media--content creators--and a distribution format. Distribution clearly is changing more than the value of content creation. Voice is both an application and a driver of "access lines" or distribution. In both the newspaper and voice cases, the applications remain important. The distribution is becoming less relevant.

The issue is when a tipping point is reached, and decline becomes a problem executives no longer can manage. Something might be happening in the newspaper area, in that regard. One can fairly safely say the voice tipping point already has been reached, in many respects.

Nearly half the slide in the market capitalization of newspaper stocks came in 2007, when the shares lost a collective $11 billion, or 26 percent, of their value, Mutter notes. Newspapers lost nearly as much value last year as they did in the two prior years put together.

Vonage, AT&T Settle VoIP Patent Dispute

Vonage and at&t have finalized the settlement of a dispute between the companies. No details were released. But $39 million had been mentioned earlier.

Media, Voice, Mobile, Broadband Tipping Points

In a historic first, online media companies collectively will sell more ads in local markets this year than such individual hometown media as newspapers, broadcasters and yellow pages, says Borrell Associates. That's a tipping point, a stage of development when critical mass for some new phenomenon is reached.

Five years ago business phone systems hit a tipping point: most new systems were IP-capable. A couple years ago another tipping point was reached and new phone systems mostly are IP-only. These days most new phone sales are for IP systems.

Likewise, Internet usage and access hit similar tipping points earlier this decade. Most people now use the Internet, and that wasn't true 10 years ago. Also, there was a tipping poin when broadband caught and then surpassed dial-up access as the dominant access medium.

Then there was some tipping point reached where access speeds accelerated beyond the "affordable mass access in the hundreds of kilobits per second range" to "affordable mass access in the megabits per second range."

You can see tipping points for text messaging and mobile phone use as well, even though it is only within the last decade that most people started carrying mobile phones and only within the last five years that most younger users began texting heavily, dragging older users along with them.

One watches for tipping points for all sorts of practical reasons, including evidence that it now is time to restructure the way marketing, sales, production, business models, distribution, industrial design, menus and all sorts of very practical things get done.

And the point is that all media are approaching tipping points of their own, and for reasons largely analogous to how communications is changing because of Moore's Law, IP, peer-to-peer, cheap storage, optical fiber, wireless and Web services.

In the newspaper local advertising area, a new tipping point appears to have been reached.

Online-only media companies will have claimed 43.7 percent of the $8.5 billion spent in 2007 on local advertising, usurping the long-time lead of newspapers. While newspapers three years ago controlled 44.1 percent of the local market, they will capture only 33.4 percent of sales this year.

The growth of the online media companies “came mainly at the expense of newspapers and yellow pages publishers,” who have lost a combined 19.6 points of local advertising share in the last three years, says Borrell.

Having spent some time working at newspapers, as well as at publishing companies with multiple products, a concrete way to view tipping points is the impact on structuring of sales forces.

Typically, newspapers and other local media try to build their online businesses by selling new media to their legacy customers. Sometimes they try to use a single sales force to sell online and legacy products. That doesn't work, long term.

In fact, it doesn't quite work even short term, as sales forces direct their behavior to where they can make the most money, and that never is in the emerging businesses.

So one winds up with a strategy akin to launching a Boeing 777 into the air by rolling forward slowly on a long runway. No matter what you do, you crash at the end, because there never is enough runway if you don't get your airspeed up pretty quickly.

Companies that rely on their legacy sales forces to sell the new products--even though it seems logical--will crash their planes at the end of the runway. The only way to succeed is to cut the cord. Build separate sales teams with separate incentive structures; not "converged" sales teams.

One does not "incrementally" jump a very wide ditch. One leaps. One makes it or not. But it can't be done incrementally and slowly.

Ribbit!

Ribbit has unveiled a new platform for developing telephony services and integrating them with Web apps, as well as what it says is a new business model as well.

The company says it has a 600-plus developer community and already can be integrated with salesforce.com.

"The world doesn't need another phone company," says Ted Griggs, co-founder and CEO at Ribbit. "What it needs is new kind of phone company, one that liberates voice from its current confines -- devices, plans and business models -- and more readily integrates into the workflow of our professional and personal lives."

At the core of Ribbit's technology offering is an open platform that enables developers to bridge the worlds of traditional telephony and the Web. The Ribbit SmartSwitch, evolved from a Lucent-tested CLASS 5 softswitch, and open Flash/Flex-based application programming interface will enable non-telephony developers to quickly build innovative, rich voice applications and integrate them into Web sites, communities and applications, Ribbit says.

By connecting voice from any Flash-enabled browser to the PSTN (public switched telephone network) and new VoIP (voice over IP) networks, over 750 million computers become the next generation of phones with developers deciding how they work, the company says.

With an assortment of back-office and service delivery infrastructure, the platform also enables developers to not only build services, but sell them as well.

In the first quarter of 2008, the Ribbit for Salesforce workflow integration will be available for salesforce.com customers via the AppExchange.

In the first quarter of 2008, Ribbit will open its service to consumers. Also in the first quarter, the company will sell commercial and enterprise packages. Both the consumer, small, medium and enterprise markets will be areas of focus for Ribbit.

Ribbit is another example of the growing "voice is a mashup" trend, where communications and voice simply are integrated with applications.

328.7 Billion VoIP Minutes in Third Quarter

Service providers worldwide recorded an estimated traffic volume of 328.7 billion VoIP minutes during the third quarter, according to iLocus. Of those minutes 72.3 billion were local, 232 billion were national long distance and 24.4 billion were used for international long distance.

About 69.1 billion of those minutes were retail, 3.2 were wholesale local VoIP (white labeling, for example).

There is about 10 percent double counting in national long distance and about 20 percent double counting in international long distance. Double counted minutes are those minutes where the same call is being relayed by two or more carriers and counted as traffic by each one of them.

The top five service providers ranked by minutes were China Telecom, China Netcom, AT&T, China Mobile and Qwest.

Vonage Outage

Users of Vonage's internet telephone service have been reporting a major service failure, ongoing since Friday. In some cases, it appears that incoming calls are not connecting. Vonage is forwarding the attempted calls to subscriber landlines and cellphones, but repeatedly, and late, some customers report.

An anonymous administrator of Vonage Forum, the independent discussion board where gripes were aired, reports that Vonage claims to have resolved the issue this morning, but users continue to report problems.

Vonage can ill afford such lapses, to say the least. Not when its advertising emphasizes how reliable the service is. Not when it faces yet another patent infringement fracas, this time with Nortel. Unfortunately, nobody in the VoIP space benefits much (competitors might enjoy Vonage's travails to an extent) when VoIP has these sorts of issues. Sooner or later, everybody is going to do VoIP, and the residue is going to cling to all the other providers when that happens.

Nortel Claims Patent Infringement by Vonage

Nortel Networks has sued Vonage Holdings Corp., alleging Vonage is infringing 12 Nortel patents. Of course, in some ways it is a counter-suit, as Vonage earlier had sued Nortel seeking to invalidate three of the patents.

An injunction would prevent Vonage from using technology that relates to 911 and 411 calls, as well as its "click to call" feature.

CLECs Must Race Tide

Even though consumers now account for only about 22 percent of total incumbent telco revenue, and even though dominant telcos are losing share in that market, competitors in the business segment essentially are racing an incoming tide.

That tide is lost incumbent market share. At some point, regulators will decide the market leaders have lost enough share, and give incumbents more freedom to price and package their services, which inevitably will lead to higher wholesale rates for competitors that now rely on incumbent facilities--and wholesale discounts based on their market power--to build their businesses.

So the essential strategic task is to take share now, while it can be more easily gotten, knowing that competitive conditions will sharpen once the incumbents are more free to package and price. And that tide is coming in.

U.S. telcos continue to lose residential phone subscribers to both cable VoIP and wireless subscriptions at a steady seven to eight percent a year, according to Citigroup analyst Michael Rollins. Wireless is a lesser issue, as incumbents own a majority of that business, and simply must cope with product substitution. Wireless penetration should rise from an estimated 83 percent this year to 87 percent by the end of 2008.

Indeed, by 2010, wireless-only households should rise to 27 percent, from 13 percent last year and an estimated 17 percent this year, Rollins argues.

Cable VoIP penetration should jump from 10 percent last year and an estimated 14 percent this year to 25 percent by 2010. If the Federal Communications Commission sticks with precedent, that is going to be enough lost share to trigger an end to wholesale access policies favorable to CLECs.

If Rollins is right, those deregulation rules will start to trigger in just a couple of years. Of course, one can argue that market share losses in residential are not the same thing as losses in the business markets. But that hasn't stopped the FCC from deregulating in the past.

Ironically, incumbent market share loss is the very thing that will unleash them as more formidable competitors.

Mobivox Hopes to Bridge Generation Gap

Younger people hooked on instant communications like SMS and IM communicate differently with their grandparents, a new survey by Mobivox finds. That there are clear generational differences in how we communicate with family and friends will come as no surprise to just about anybody.

Almost 60 percent of people under 35 say that they communicate differently with older, less tech savvy family members and friends. The reverse might also be true: parents sometimes communicate with their children using different modes than they do with peers.

But the gap probably is widest between teenagers and their grandparents 65 or older. Older users are two times as likely to say that technology "gives me a headache" (less than 10 percent of those over 65 use SMS or IM regularly and over half still use letters).

And the impact of these barriers on relationships is felt across generations, says Mobivox. One in three Americans, regardless of age, say that they don't connect as often as they would like with those they love because they don't use the same communications technology.

The poll also reveals that 60 percent of those under age 35 said that family and friends call them for help with their technology woes.

Mobivox has launched GiftVOX to lessen some of those woes.

GiftVOX lets every family's "go-to technologist" set up free international calling for family members. All the recipient has to do is call their local Mobivox access number and, during that first call, opt-in to activate their account.

GiftVOX eliminates the need to ever go online, program a contact list or learn to use a new gadget, Mobivox says.

What's interesting here is the pre-programming of accounts on behalf of other family or social group members who might not be motivated to do so themselves (I have encountered this problem myself, trying to set up a family calling group).

The new program is about as simple as it could possibly be. Group members don't need a computer, a credit card or even a calling card number. All they need is a mobile or landline phone.

Because Mobivox allows members to connect from any phone, it is especially easy for older generations to use since eight in 10 of those over 65 rely on home landline phones to communicate, compared to 50 percent using mobile phones and only one in three on email, Mobivox says.