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Summary:

The unrelated announcements this week of Apple’s iPhone and Vonage’s plan to bundle Wi-Fi with VoIP got me thinking: Do we need some new competitive analysis to figure out what’s really happening in the world of good ol’ talk talk talk? After spending most of Thursday […]

The unrelated announcements this week of Apple’s iPhone and Vonage’s plan to bundle Wi-Fi with VoIP got me thinking: Do we need some new competitive analysis to figure out what’s really happening in the world of good ol’ talk talk talk?

After spending most of Thursday plowing through numbers — free versions of pricey analyst reports, company financial filings and press releases and news reports, the trend until now seems to be stuck in silos: VoIP vs. VoIP, wireless vs. wireless, etc. There’s a little cross-pollination when straight consumer VoIP numbers are compared, but is Vonage really a competitor to Comcast?

Or is Vonage’s Wi-Fi bundling plan going to butt heads more seriously with advanced cellular offerings, like aPhone? So far, the numbers that are out there don’t even start to tell the more complete story of new voice competition.
So instead of worrying whether or not Comcast is going to “overtake Vonage,” whatever that means, we should perhaps be thinking in terms of competing for available talk minutes of ANY sort — and which device those minutes will gravitate to.

Right now, I’d have to give the edge to wireless, mainly because it seems like innovation and new applications are happening there faster than they are in the wired (or even Wi-Fi) VoIP world, at least on the consumer side. Plus, a cell phone is a necessary bit of our going-out armor these days, for all but a few holdout Luddites. If you had to lose one right now, landline or cell phone, which would it be? And when you start adding more cool factor like the iPhone’s promised apps (like a truly integrated iPod), there’s even more incentive to go mobile.

So for Vonage — perhaps reselling EarthLink’s Wi-Fi will help them replace a few more POTS phones, but cellular has been selling service and access since day one. When it comes to talk competition, the days of comparing VoIP to VoIP should be past us. Instead, we should simply be asking, which way will the minutes go? It’s not an easy chart to build or an easily quotable report to sell, but it is the way end-users are weighing their purchase decisions.

  1. Om,

    VoIP and Cellular are a very strong combination, especially if it’s with a GSM carrier in the mix. I’ve long looked at the SIM card as the ideal way to handle authentication onto the “WiFi network” when roaming.

    At MuniWireless and GadgetFest we had client BridgePort Networks show off their MobileStick, a USB device the size of a memory stick, that has a SIM inside. The SIM is a clone of your cellphone’s GSM SIM. It turns your PC into a Cellphone, but unlike the GSM/GPRS cards, this works over IP, and makes the Internet one giant roaming location. Then with a soft client from CounterPath calls to and from your cell number can be made over IP ala Gizmo or Skype.

    The difference, it’s your cell carrier who is routing the call to what appears to be your cell phone. This is great for people inside buildings where cell reception is poor (like above the tenth floor), of who roam internationally.

    MobileStick was announced conceptually almost a year ago and it means carriers who deploy it, or a client on the handset that does what Gizmo, TruPhone and yes, Abbeynet too, are doing on the Nokia N80 Internet Edition. To move traffic over the less costly Internet vs. the circuit swithched networks.

    Why the carriers are not innovating or buying up innovation is anyone’s guess, but they should. The idea of MobileVoIP is to obvious to you, and to me.

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  2. Maybe I’m in a minority, but I’d rather have a landline than a cell phone. Cell phones are crappy and frustrating. 99 of 100 times, I can call with the good, clean, high quality fun of a regular old phone.

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  3. Paul – The real advantage the wireless has over POTS-replacement VOIP is that wireless carriers can control the customers better through the lock-up associated with equipment subsidies (which gets them through the “churn danger zone”) wheras VOIP has very low barriers to customer change – so customer acquisition costs and churn rates will work against them in the battle for customer talk minutes. In a hybrid VOIP-WIFI/wireless world (if that ever comes to pass) the wireless players should have a distinct advantage…

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  4. Jacob Varghese Friday, January 12, 2007

    If Apple makes an iChat(voip) widget available for their phone and offers seamless call transfer (UMA ), it would truly be revolutionary. I’m not sure we’ll see that this year. That would be the deathblow to all these voip-only carriers.
    I’m not sure Cingular will allow them to offer this functionality. It was a mistake for them to tie down this phone to a carrier.

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  5. I believe the combination of VOIP over WiFi with cellular is the next big step in mobile phones. My friend’s company builds a chip that enables transparent switching between wifi VOIP and cellular, on the same call, as the signals fade back and forth. It works extremely well, and his chip is being used now in several phones from big manufacturers and carriers.

    This kind of stuff excites me more than a nifty UI from the iPhone. I can use VOIP while I am at home, office, Starbucks, or anywhere else with an open wifi connection (well, Starbucks isn’t really “open”), and get perfect quality phone calls. Then when I walk outside to my car, the phone switches to cellular. The hybrid wifi VOIP/cell is already a reality.

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  6. Jacob Varghese Friday, January 12, 2007

    With T-mobile’s active UMA testing and international presence, I’m surprised that Apple didn’t go with them.

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  7. Jesse Kopelman Friday, January 12, 2007

    Andy, the idea of using SIM for authentication over WiFi has been around for quite a while and big companies like Nokia have introduced products based on it. Despite big name interest, it hasn’t ever really taken off with carriers. If anything, US carriers have soured on the SIM concept because they want to lock the user to the device to their network.

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  8. Andrew – What’s that company’s name?

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  9. [...] Wi-Fi VoIP and iPhone: New Competitors? The unrelated announcements this week of Apple’s iPhone and Vonage’s plan to bundle Wi-Fi with VoIP got me thinking: Do [...]

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  10. [...] Wi-Fi VoIP and iPhone: New Competitors? The unrelated announcements this week of Apple’s iPhone and Vonage’s plan to bundle Wi-Fi with VoIP got me thinking: Do [...]

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