This will allow synchronous communication for gaming or social apps so users can talk app-to-app while they play came or share photos together. Or it could allow other apps to easily add support for free calls to customer support. That could make apps more engaging, potentially making more money for developers.

Rebtel’s SDK could also be used by developers to create their own branded mobile VoIP app without building their own back end. Messaging apps could easily add voice service using Rebtel, which also allows them to call fixed phone numbers.

The calls are carried over Wi-Fi or 3G and offer HD voice quality. Users don’t have to be Rebtel members, they just press a “talk” button in their app. The service is free for now, though Rebtel may look at charging later for apps that do a certain amount of volume.

Rebtel is starting slowly, testing the new platform with just three companies including VIVfone, which makes a mobile CRM app, and MobisleApps, which develops lifestyle, dating and productivity applications. Rebtel is looking at learning what developers want through its private beta before opening up the service next year.

Rebtel CEO Andreas Bernstrom believes there’s a big opportunity in connecting mobile apps via voice. He said developers have been looking for a way to add a voice layer to their apps without having to do a lot of the work. And he believes that can ultimately help Rebtel by introducing the service to a lot of new customers. Rebtel currently has more than 17 million users and is on pace to generate $80 million in revenue this year.

Rebtel faces some competition from services like Twilio, Skype and WebRTC, an emerging technology that will enable voice and video calling from any browser. Joyn, a rich communication technology from the GSMA that is backed by big carriers, can also be used for in-app communications. The rise of these services comes as mobile users spend less on voice and text messaging as they move to more over-the-top voice and messaging apps. The promise of Rebtel’s SDK hinges on the belief that people want to keep talking by voice, but they’d like to do so in the context of existing mobile apps. That might work in some situations though it’s unclear how many apps will really benefit from synchronous in-app voice calling.

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The four waves of revenue

Telecom analyst Chetan Sharma says that the telecom industry has been through three distinct revenue waves in its history. First there was the voice wave, then messaging and finally data.

Both the first and second of these waves produced phenomenal profits for decades but now are in serious decline due to market saturation and the rise of consumer-friendly OTT alternatives. While many in the industry see the third wave as being a replacement cash cow, others believe operators must look beyond data revenue to the fourth wave: OTT and Value Added Services (VAS).

Having become accustomed to diets of “all you can eat” data bundles, consumers naturally expect the price of data to drop over time, not rise. If operators bump up data costs, we can assume consumers will respond by flocking to services like Freedom Pop, which relies on Wi-Fi as the main source of data, switching only to cellular data when Wi-Fi is unavailable.  So while data will undoubtedly continue to be a major part of operators’ revenue, there is only so much cash they can directly extract from it. And more importantly it’s highly unlikely that that revenue will ever compensate for those lost from the decline in voice and text use.

The fourth wave is already building rapidly, as people are now using their mobiles to do everything from paying their grocery bills and online shopping to downloading digital media or even checking their medical records. Virtually all of these services are provided not by operators but by third parties. This has understandably rattled most operators’ cages. Many have panicked and gone so far as to throttle their users’ service in response – or even completely blocked them from using services such as Skype (and later defending their moves citing policies hidden deep in the terms and conditions of consumers’ contracts).

Industry discovers benefit of OTTs

In January 2012, the Internet Telephony Services Providers’ Association in the UK condemned mobile operators Vodafone, T-Mobile and Orange for their use of such anti-consumer practices, leading European Commissioner, Neelie Kroes, to call for greater transparency. And since then tide in Europe slowly seems to be changing.

In September Swedish operator Telia not only backed down on plans to charge customers extra for using VoIP services, but even introduced special VoIP packages themselves. Such a move is an implicit acknowledgment of how operators must embrace progressive technological change and the desires of their customers, instead of trying to thwart them.

Indeed, more operators are continuing to accept this view and have begun the process of working with OTT services. Weeks ago Deutsche Telecom teamed up with online music provider Spotify to give users the option to choose a payment bundle with unlimited music streaming– even going so far as to not deduct usage from the user’s data allowance. Crucially, such deals not only enhance an operator’s offering to customers, but instantly transform the OTT service from being a competitive threat or parasite to a valued business partner.

These types of partnerships are not unheard of, of course. Examples include, with varying degrees of success, Vodafone and Three working with Skype in the UK; or AT&T combining with Twilio; and Sprint working with Google Voice. The problem has been that many such OTT acquisitions or partnerships from previous years have often felt reactive rather than a proactive from operators. A high failure rate in such partnerships often confirmed this suspicion. When such partnerships are run effectively however everyone benefits: Consumers get more choice, operators have more to offer and OTT services get to monetize their software.

Recent months have also seen a surge in news relating to operators partnering with established companies from other industries. AT&T recently teamed up with computer giant IBM to offer cloud-computing resources to Fortune 1000 companies. A potentially hugely profitable venture.

Elsewhere, Telefonica set up a new division within its company to analyse and then resell user tracking location data, mining and monetising the huge amounts of real-time consumer data already available to them.

It’s do or die time

OTT services are not a passing fad – to the contrary they have become so significant as to be a legitimate fourth wave of revenue for the telecom industry. Operators then must seek to partner with (or compete with) OTT services, and monetize those efforts. Failure to do so will inevitably lead to ceding their turf, consigning them to be nothing more than data carriers.

To preserve their market position, operators need to be among the vanguard setting new industry trends, to be more flexible so they may respond quicker to market demands. And they must look for opportunities to form intelligent partnerships with relevant technology companies.

Operators are standing at a critical crossroad.  They need to not only choose their path, but whom to walk it with.

Andreas Bernström is CEO of Stockholm-based Rebtel.

Photo courtesy of Shutterstock.

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For any telecommunication company these are frightening numbers, and they’re reacting to them in the only way they seem to know: by blocking, charging for or throttling competing services that are cannibalizing their revenues.

But this fear is caused by business imbalance that they seem unable (or unwilling) to fix. Look at any European mobile operator, and it’s clear that around 80 percent of their revenues are still attributed to their most traditional — and most eroding — service: voice and data. At the same time, around 80 percent of their investments go into improving the congested infrastructure necessary to support the dramatic growth of third-party data services.

It’s obvious that this situation isn’t going to get any better. According to Håkan Dahlström of TeliaSonera, the current average monthly data spend is roughly 300MB — and it’s expected to reach 3GB by the year 2020. Needless to say, this model is in a state of transition.

So why do operators seem so reluctant to move to a sustainable (and inevitable) data pricing model?

The truth is that even though traditional revenues are eroding, they are still able to produce mind-boggling figures thanks to their staggering margins. And with consumers firmly attached to the notion of unlimited data, there are few — if any — telecoms companies that want to be the first mover. Meanwhile the longer this transition is delayed, the more cashflow operators are bound to generate, which means good news for shareholders and smiles all round.

On the flipside, however, subscribers will have to endure more expensive and more complicated variations of data access packages, with a plethora of potential data cap limits, access add-ons for VoIP and other OTT services. And it is not looking like it will get easier any time soon.

How will operators fight back, then?

Some in the telecom industry are pinning their hopes on RCSE — the Rich Communications Suite. This is, effectively, an industry-wide attempt by major mobile operators to create their own version of Viber and WhatsApp. However, the core feature set of RCSE was defined in February 2008 and the product is still not out the door: anyone who’s followed the development of VoIP in the app stores knows that four years is equivalent to several generations in the mobile world. Can anyone say with certainty that it will ever emerge?

In fact, I’d be surprised if RCSE was able to compete — but as one leading mobile operator VP put it at the recent Open Mobile Summit in London, what else is there?

Operators are being marginalized and put under pressure from all directions. In 2007, they controlled access, address book, billing relationships and services. Today they essentially just control access and billing. The OTT layer now provides services, address book and a digitalized billing relationship that are all far superior to the legacy systems provided by operators.

Adding to all this is the ongoing net neutrality and regulation debate. The EU and its commissioners already have a dim view of operators in light of the endemic blocking and throttling of services: if mobile VoIP is being blocked and discriminated against and the operators roll out their RCS solution, wouldn’t that scenario qualify as seriously anti-competitive behavior.

Regardless of how this issue is twisted and turned, the real solution is that operators need to move faster to a tiered data revenue model; they need to educate customers about data spend; they need to simplify their offerings as much as possible and, last but not least, they need to do their utmost to allow creative developers to build great communications services that add real value to the access they provide.

Andreas Bernstrom is CEO at Rebtel, the world’s largest mobile VoIP company after Skype, and is an industrial advisor at EQT Partners. He started his career at Goldman Sachs, before becoming U.K. managing director and later COO of TradeDoubler.

Speed bump photograph copyright Shutterstock / Stacie Stauff Smith Photography

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Rebtel is now up to 17 million users, who access the service over Wi-Fi and 3G on iPhone, Android devices and PCs. IPad users previously could install Rebtel’s iPhone-optimized app on their slates, but now with the dedicated iPad app, they get a fuller experience that takes better advantage of the larger screen real estate. The app offers tablet-optimized navigation and graphics and also integrates with an iPad address book, making it easy to see who you can call for free. An Android tablet version is expected in the coming weeks while a Windows Phone client is expected by the end of this summer.

Andreas Bernstrom, Rebtel’s CEO said the app makes sense as more people shift their computing work load to mobile devices. He said one of Rebtel’s strengths is that it was built from the ground up to be mobile, which is how most of its customers utilize the system.

“We are squarely in the middle of the post-PC era, marked by an increasing amount of consumers who have leapfrogged the classic desktop PC in favor of multi-purpose mobile devices that allow for greater creativity and social interaction. We are excited to expand our development pipeline to respond to this growing global demand for tablets and iPads.”

Rebtel, which just passed the 15 million user mark in February, continues to grow as more people are turned on to its ability to offer free and cheap calls. Bernstrom said Rebtel calls to outside linesare up to 60 percent cheaper than Skype. He added the company, which is set to do $85 million in revenue this year, has an average revenue per user that’s three times that of Skype. He said the average user is spending 350 minutes a month calling on Rebtel.

The rise of so-called over-the-top voice and messaging providers is putting more and more pressure on carriers, who are seeing some of their most profitable services undercut by Internet-based apps. Bernstrom said the operators are increasingly having to confront the new realities of business as more users look to OTT services. A Juniper Research report forecast that 640 million people will use OTT mobile VoIP services by 2016.

Carriers will need to adjust their pricing plans and reconcile the fact that while most of their traffic is data, most of their revenues comes from voice and SMG. Mobile analyst Chetan Sharma reported recently that 85 percent of carrier traffic for the four nationwide mobile operators networks was pure data, but that data only accounted for 39 percent of all mobile data revenues.

“At some point, they’ll have to say, ‘Screw voice, you’ll get it for free. Now, do you want 5-10-15 GB of data?’” Bernstrom said. “That’s years away but we’re helping speed that up.”

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Rebtel made a smart decision early on to bring its communication service to multiple mobile and desktop platforms. The company has apps for iOS, Android, BlackBerry and Microsoft Windows. Similar to Skype, calls can be placed to other Rebtel users for free, while calls or messages to landlines and mobiles around the world are priced as low as $0.01.

Building up an audience of 15 million users with such products shows that consumers are looking for less-expensive ways to stay in touch with one another by leveraging the Internet as a conduit. Obviously, calling a mobile or landline with Rebtel isn’t a full VoIP solution, as the call is routed on a carrier voice network or an old telephone line.

But support for Wi-Fi and 3G calling lessens the need to use traditional cellular voice minutes. Sadly, there are few ways to have a data-only service plan on a phone in the U.S. I am doing just that with VoIP and SIP support on my Galaxy Nexus with a data-only SIM, but I am certainly in the minority.

Most people will still pay for a voice service these days, but with services such as Rebtel, folks can cut back to the lowest voice plan with their carrier, using Rebtel as a cheaper substitute. That is apparently happening, as Rebtel has now delivered 500 million connected calls and 2 billion minutes of international calls while boosting revenues in 2011 by 55 percent.

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It’s a shift that has been happening for years, and was accelerated by the launch of Apple’s iPhone and Google’s Android platform. Voice over IP (VoIP) companies began eating away at carrier’s revenues since the early and mid-2000′s. Rebtel, a five-year-old mobile VoIP company that enables users to talk for free via the web, has been profitable since 2010 and has a $75 million revenue run rate, said Rebtel founder Hjalmar Winbladh.

Still, carriers continue to be very reliant on voice for their businesses. Winbladh said that voice and text messaging currently provide 85 percent of revenues and 95 percent of profits for carriers. The carriers all over the world have been able to maintain their voice revenues partly through a combination of government policy and the ecosystem of monopolies, said Winbladh.

Add to that ecosystem potentially some unsavory practices. Winbladh said that two carriers in Germany had blocked Rebtel’s service in their markets, and one did so after it purchased a competitor to Rebtel. It’s an “interesting business model. . .I’m not sure it’s legal, to be honest,” said Winbladh.

But while carriers can try to slam small companies, they’ll have a harder time brushing off the web giants like Facebook, Google and Microsoft. These companies will be the next-generation of voice players said Ilja Laurs, founder and CEO of mobile application company GetJar. In addition, these web players will be able to provide web innovation and the communications services that consumers want.

Voice applications from the phone companies have been “too limited,” and consumers are looking for voice to be able to be integrated with communications and social networks like Facebook, said Laurs, adding “Facebook is the ultimate communications service.” As voice shifts to the web it will become “an add-on service,” or yet another API that is added to a data service, said Laurs, for example, adding voice to social gaming. Voice is being disaggregated across the web, and the carriers better get used to it.

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Often living for years with a relatively small amount of investment, this generation of companies is characterized by having endured setbacks, switches and significant changes in the landscape. It’s a situation that, in many cases, has helped foster a real sense of community and a survivor’s attitude.

In the third part of GigaOM’s Euro 20 roundup, we’ll look at five startups we’ve dubbed Almost Famous. They’ve weathered the storm, come out the other side, and have solid products to offer.

• Our introduction to GigaOM’s Euro 20
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Criteo

Founded: Paris, 2005
Investors: Elaia Partners, IDInvest, Index Ventures, Bessemer Ventures
Business: Online ad re-targeting

Europe’s advertising industry is rich and creative, with a long tradition of building clever and innovative startups. But of all the names that are bandied around the continent, perhaps France’s Criteo is the one to keep notice of over the next year.

It focuses on “re-targeting” — that is, catching users who have visited a website but failed to complete a purchase, and then showing them ads on other sites in order to tempt them back.

It’s proven highly successful, with annual revenues set to pass $200 million soon, but the real question is what happens next. The company has raised money every two years since its inception, suggesting that another round could be on the horizon — but with such good numbers, perhaps an acquisition or flotation should be the next logical step.

Mind Candy

Founded: London, 2003
Investors: Accel Partners, Index Ventures, Spark Partners
Business: Online games

Early efforts from London game developer Mind Candy were critically acclaimed but not commercially successful: a formula that led founder Michael Acton Smith to change direction in 2007 by introducing a new game, Moshi Monsters. A virtual world aimed at tweenagers, the title has become a significant multimedia brand and allowed the business to reposition itself in the social gaming space.

On the back of recent growth, the company — led by serial entrepreneur Michael Acton Smith — has seen its value rise dramatically in the past year. That led to investor Spark recently selling half its stake. Is this just the beginning for Mind Candy’s journey to Super Star?

Moo

Founded: London, 2006
Investors: Atlas Venture, The Accelerator Group, Index Ventures
Business: Customizable business cards

When it began five years ago, Moo took one of the London’s newest industries — the web — and married it to one of its oldest: printing. It harnessed new digital printing techniques and hooked into photo-sharing services such as Flickr and Picasa, to allow people to customize and print business cards, postcards, greeting cards and more. With a strong following among early adopters and a charming, human approach, it offered something other print-on-demand services struggled with.

A move to the next level may feel overdue. The company’s long-term plans have no doubt been hampered by the increasingly gloomy retail climate in Britain. But the business seems to be carrying on without too many hitches. It’s important, however, to see Moo not only as an interesting entity in its own right, but also as a crucial player in building up the vibrant startup scene in Britain.

Shazam

Founded: London, 1999
Investors: Kleiner Perkins Caufield Byers, Institutional Venture Partners, DN Capital
Business: Music discovery

The oldest startup on our list by several years, Shazam has always been built on great technology. Its first product, launched in 2002, allowed users to identify music they were listening to simply by waving their mobile at the sound. With an audio fingerprinting system that feels like magic, the team has expanded its business to apps and partnerships, with customers like AT&T, Vodafone, NBC and Fox.

But what looked like an increasingly maturing business two years ago, suddenly took on fresh verve with an injection of capital from Kleiner Perkins and a change in management. That switch escalated the company’s plans and now, with an expanding scope and huge ambitions, the business is looking at the television advertising market.

Viadeo

Founded: Paris, 2004
Investors: AGF Private Equity, Ventech
Business: Business networking

It’s fair to say Europe has developed a reputation for clone services — most notably with the Samwer brothers, a duo who have made their careers building and selling German-language versions of sites like Facebook and Groupon. It’s no surprise, then, that French professional networking site Viadeo, is sometimes spoken of in disparaging tones; after all, it started just a few months after its biggest rival, LinkedIn.

It might not have developed as much as its transatlantic cousin, but it’s no slouch either. It has been consistently profitable since 2009, and having rolled up a number of smaller companies, it now has 35 million users. Next up? It’s plotting a course to become the network of choice in rapidly growing markets such as China.

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We wrote about Rebtel launching its free international calling on Android back in June. This works in the same way and expands it to BlackBerry devices. The app runs in the background and intercepts an international call placed to another Rebtel user. A user will still have to use their carrier minutes for the call, but the international part of the call is free, and it doesn’t require a Wi-Fi connection. It works for the 50 countries Rebtel supports.

This is in addition to Rebtel’s existing plan for cheap calls between international users, which involves Rebtel creating a local number for a user to call when they call a contact in a foreign country. There’s a way to make those calls free too, by one person hanging up and calling their friend back. The new BlackBerry app should greatly expand the number of people who can take advantage of the simpler way of making international calls for free through the Rebtel app. Rebtel also launched an iPhone app in 2009, but the free international calling feature won’t come to the iPhone until this spring.

This is all part of Rebtel’s larger goal to become a bigger VoIP challenger to Skype. The company, which already bills itself as the world’s largest independent mobile VoIP company, said it now has more than 9 million callers, and more than one billion minutes of international calls logged. Rebtel’s revenue more than doubled in 2010 to about $40 million and is projected to hit $75 million this year. Those numbers still put it far behind Skype, which this week hit a new record of up to 27 million users online at any moment and recorded 6.4 billion minutes of calls to landlines and mobiles in the first half of 2010. But as Rebtel matures and rides the growth of smartphones, it should be a solid No. 2 in voice calls; though as Skype is showing, the game is moving to mobile video as well, something Rebtel has no answer for yet.

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Such services are big business: The survey data, sponsored by Rebtel, a low-cost mobile VoIP provider, estimates 58.8 million Americans spend a total of $23.8 billion per year on international calls. Of those, 51 percent are still using a traditional landline, so there’s still a tremendous business opportunity for the Rebtels, Skypes and Truphones of the world. Here’s another example from the survey data: 42 percent of men vs. 24 percent of women say they’d likely pay a monthly fee for video calling services. And 10 percent of men would be willing to change their international calling to VoIP while a scant 2 percent of women would consider the same.

If men are more apt to use VoIP or video call technology, why waste a majority of advertising dollars on them if they already have an affinity for the services? Throwing ad dollars at us vain, visual men, who already like to talk in front a camera on their computer is easy, but convincing women to do so would rapidly build up an entirely new user base.

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