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Summary:

When it comes to mobiles phones, if we want to talk more, we can expect to pay more. But VoIP over 3G networks could drastically change that. Carriers aren’t too keen on the idea, but some folks believe it’s the next logical step in mobile communication.

When it comes to mobile, time is literally money. Carriers like AT&T, Verizon Wireless, T-Mobile and the rest make us pay based on how many minutes we use — or in the case of prepaid plans, expect to use. If we want to talk more, we can expect to pay more.

But VoIP over 3G networks could drastically change that. Callers could place calls for little or no fee with VoIP apps and in the process, opt for less expensive plans with less minutes. Admittedly, carriers aren’t too keen on the idea. But it’s quickly becoming a topic of much debate. And some folks believe it’s the next logical step in mobile communication.

The 3 Skypephone

Skype’s Fight

Skype certainly does. Russ Shaw, a Skype VP and head of its mobile business unit, told me last week that not only is the company actively working towards delivering its mobile VoIP solution on multiple networks around the world, it believes it can achieve that goal sooner rather than later. “We are starting to see a softening in carriers in relationship to VoIP,” he said.

But according to Shaw, certain carriers have told Skype that the only way they’ll enable VoIP over 3G is by charging for it, an approach the company believes will hamper its adoption. Skype wants carriers to see the value of free VoIP over 3G. And it thinks the experience of 3, a small 3G wireless operator in the UK that — working in conjunction with Skype– has allowed its users to place VoIP calls over 3G, will help convince them of it.

According to a case study performed late last year by CCS Insight Consulting, Mobile Skype users generate 60 percent more voice revenue for 3 than non-users. Mobile Skype users were also found to text message others almost 33 percent more than non-users. Perhaps most importantly for carriers that are trying to drive revenue through 3G, Mobile Skype users are twice as likely as non-users to pay for data.

Apple’s Apprehension

Evidently, some carriers are taking notice. Back in October, AT&T said that it would open its 3G network to VoIP providers on the iPhone. It was good news for Skype given that, according to Shaw, the company’s mobile app has been downloaded more than 10 million times in Apple’s App Store, making the software the leader in VoIP on the iPhone. There’s just one problem: Apple has yet to approve the VoIP-over-3G functionality.

That might be due to quality. According to Karl Good, Truphone’s director of applications, that’s his company’s biggest problem with it. “Although it is technically possible to offer VoIP calling over 3G on devices such as the Android, the relatively low bandwidth of 3G compared to Wi-Fi means that those calls are very often of a poor quality,” he said.

An industry insider I spoke with that asked to remain anonymous echoed that sentiment, saying: “In areas where multiple carriers have 3G deployed, the quality of available bandwidth still has a lot to be desired. Bottom line, depending on where you are, and what carrier you are using, it’s hard to say exactly what you can expect to get.”

All of which, of course, fails to mention that 3G connectivity is lacking in several areas around the country, on every carrier network. And the chances of that changing anytime soon are slim.

Are We There Yet?

So where do we stand? On one hand, VoIP providers are espousing the benefits of VoIP over a 3G network, saying it’s what customers really want. On the other hand, few carriers have loosened their grips on their networks, and many handset makers are cognizant of the fact that so far, VoIP over 3G loses much of its allure once due to quality issues.

Simply put, for now, it doesn’t seem that VoIP is ready for 3G. Or perhaps 3G just isn’t ready for VoIP.

  1. I agree with you for the most part Don. But unless something has changed in the last few months with THREE in the UK, the Skype calls going over the network are not at all IP calls (i.e. VOIP).

    While those Skype calls are set up via the Data side of the handset, but the calls run over the same Voice network as all other THREE calls which is the same circuit switched network all the operators have. Also, that technology comes not from Skype but from iSkoot.

    All of this said, I use it regularly, as well as Truphone, when I’m in the UK and it does work very well. The joy of dropping into a conference call via HiDef Conferencing, with one click, and not paying more than my monthly fee is wonderful.

    The model which Skype and 3 have is very sound, but so would be the same model over WiFi with Cablevision as well as over WiMax. Not only could this work for Skype, but it could easily work for Truphone as well as GoogleVoice/Gizmo.

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  2. VoIP over 3G (in fact, VoIP period) is incredibly inefficient compared to native voice protocols. It’ll require 50% to 100% more spectrum, and there’s a shortage of spectrum already.

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    1. Agreed. Hopefully things will change soon. But for now, I certainly don’t expect it.

      -Don

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  3. Don, I agree with you but your first sentence:
    “or in the case of prepaid plans, expect to use.” Should be “postpaid”. Even though it is counterintuitive, Pre-pays are by the minute, post paids are “plans” where you guestimate how much you are going to use/month

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  4. This is no different than early voip in fixed line networks. When there isn’t sufficient bandwidth to carry voip calls, no one will use it or from carriers perspective, PAY for it.

    Fixed line internet:
    28k – no voip
    56k – very, very early voip
    128k – more use
    dsl – huge uptick
    FIOS/UVERSE – about standard

    mobile networks:
    1G = 28k – no voip
    2G = 56K – no voip
    3G = 128k – light adoption
    3.5-4G = DSL – start to see an uptick
    LTE – become stardard

    Same problem, two different networks, same end result.
    LTE -

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  5. I’ve used Skype since it pretty much first started – I was working in Denmark at the time. My kids have grown up talking to me working all around the world with it. Finally this week my wife took the plunge and bought a “3″ skype phone. While the quality isn’t as good as on a PC it’s completely usable and the fact I can skype them from the US to them in the UK where ever they are now more than makes up for any loss of quality. Just to reiterate, from the “3″ phone they can both make and receive skype calls and it doesn;t cost any extra.

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    1. It really does add a lot of value, doesn’t it? I think Skype is on to something with its work with carriers. I’m just not convinced that we’re at a point yet where VoIP over 3G can really become ubiquitous. Quality is everything in this business and in many cases, the quality isn’t there.

      -Don

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  6. Andy Abramsom make some very good points. Also agree with the idea of postplans. All in all is should be an interesting road we travel until the carriers just become the pipes.

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  7. Actually I am using several VOIP apps on my iphone for free minutes, like Vonage, Icall, Skype and truphone.

    Looking for the future

    Thanks

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  8. It’s a real battle at the moment between mobile providers and VoIP. Obviously customers want calls that are as cheap as possible but mobile providers know that they may struggle to compete if people have a much cheaper option. This means mobile providers may of course loose out. Eventually though I think they will be forced into allowing VoIP over their networks.

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  9. Sure there will be VoIP from Skype, and VoIP from AT&T, just like I use Skye today and still have a fixed line from my cable co — which is via VoIP.

    The cable co has superior QOS, as will “AT&T” VoIP.

    As for efficiency, cable VoIP is less efficient in # bits vs circuit swithcing, but cable COs use VoIP because the total network implementation is less costly. Sure fixed BW is more plentiful than mobile spectrum, but it’s total cost that really drives VoIP for cable cos.

    This is what will drive it in mobile too. VoIP will be used eventually with LTE because total implementation cost and maintenance will be lower.

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    1. John Nicholson Monday, January 25, 2010

      Latency and Jitter on cell networks are indeed the problem but modern sip using modern codecs, iLEC, G.729 with silence suppression uses less bandwidth than GSM/Ulaw (G711). Blaming SIP/VOIP for being less efficient than packet switching isn’t a real thing. Combine further techniques like header compression CRTP, and you can get VOIP calls through at higher quality than a landlines (G711) at less bandwidth than GSM.

      currently radio’s for data traffic are prioritized lower than existing voice traffic (QOS/MPLS) as well as the radios are designed for raw speed and range rather than jitter and packet loss.

      Even when LTE comes out the carrier are still going to have to deploy fiber to their towers, as the existing T1 infrastructure is currently showing its age.

      Fun fact, the T1 goes all the way back to at least 1958, and hasn’t changed all that much.

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  10. Sri Ramachandran Monday, January 25, 2010

    The typical argument for Skype (read IP) calls is lower infrastructure costs, hence lower per-minute-charges and hence increased usage. The increased usage gives additional revenue to the operators.

    With most US operators going to flat rate unlimited use plans, it does not make business sense to invest in beefing up infrastructure to enable Skype calls. Operators do not derive any incremental benefit and neither do subscribers.

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