Mobile VoIP

• Publication date: May 2011

This study looks at the changing landscape of the mobile VoIP market; the main over the top players, the new entrants together with what they bring, and how the operators are reacting. The technical challenges are assessed, and an analysis as to the level of threat mobile VoIP brings to operator revenues is made. It concludes with a scenario for the development of this emerging market. Key questions • Who are the new en...

This study looks at the changing landscape of the mobile VoIP market; the main over the top players, the new entrants together with what they bring, and how the operators are reacting. The technical challenges are assessed, and an analysis as to the level of threat mobile VoIP brings to operator revenues is made. It concludes with a scenario for the development of this emerging market.


Key questions

• Who are the new entrants in the mobile VoIP market and how does it change the competition landscape?
• User experiences, current networks and upcoming LTE deployments - what are the technological challenges ?
• Which major OTT and managed solutions are on the Mobile VoIP market? How are the Internet Giants positioning there?
• What are the key trends for Mobile VoIP applications?
• How will the mobile VoIP market evolve by 2015, in the context of more regulation& competition on the voice market?

Data & Forecasts up to 2015 covered in the report:

- Worldwide mobile VoIP user and pentration of 3G subscribers
- Worldwide mobile VoIP volume (billion minutes)

Key findings
• Regarding over-the-top players, what was a monopoly dominated by Skype now finds itself with rivals coming in from non-VoIP domains: Google Voice has gone public (available to all US citizens), Apple has introduced FaceTime, Yahoo! Has introduced their video calling service, and as a result Skype has partnered with Facebook. These new big entrants are leading the way for innovation in unmanaged mobile VoIP. The introduction of FaceTime by Apple, although over WiFi only, has brought video calling over IP into the spotlight and more players have started to provide this service. Google and Facebook are pushing the idea of becoming a communication hub, providing the single platform from which users can activate all types of communication, from emailing to photo sharing and of course, voice calls. For these giants, the monetisation of VoIP, which has always been cause for concern (Skype is indeed hardly making any benefits), is less of an issue since they have a separate core revenue stream. For them, VoIP is positioned as a complementary service.
• Meanwhile, whilst still in the minority, more partnerships between operators and VoIP players can now be seen, and also a few more managed VoIP offerings (as in Austria). Skype now partners with Verizon and KDDI as well as 3 UK, and Sprint has now partnered with Google Voice. Further, the VoIP provider Jajah was acquired by Telefonica in December 2010. Still, whilst there are fewer operators who specifically ban VoIP applications, in most cases a voice plan is required before a data plan can be subscribed to. Further, there are cases where VoIP is only allowed on the more expensive voice packages, or there is a surcharge to be paid. For the operators, collaboration with VoIP can give them a competitive edge not only in the short term, but also in the long term with their networks migrating to LTE.
• The two main value propositions which VoIP has over the traditional operator voice model are cheap international calls and free calls between the VoIP clients. With the former, more traffic is indeed shifting to VoIP, but in fact regulation is set to drive down roaming fees and mobile termination rates in the coming years, and thus the current price advantage held by VoIP is set to decrease. As for the latter, many operator voice plans currently include an abundance of minutes, and whilst the proposition is interesting it is not expected to drastically change the shape of the market. Thus whilst mobile VoIP does pose a threat to voice revenues, in the long term regulation and the overall trend of declining voice ARPU through competition and commoditisation poses the bigger threat.
• In conclusion, IDATE forecasts that by 2015, worldwide mobile VoIP users will reach 169 million users (of which most will still be unmanaged), or 2% of mobile subscribers, or 6% of 3G subscribers. In terms of volume, IDATE forecasts that by 2015, more than 100 billion minutes of mobile voice calls will be carried over VoIP technology. Mobile VoIP is therefore not a juggernaut which will destroy the current voice market, but it will grow as a complementary service to current voice.

VOIP Industry

Contents

1. Executive Summary. 7
1.1. The changing competition landscape with Internet giants coming in .. 8
1.2. Value-added of mobile VoIP is limited to international calling...... 9
1.3. Drivers and barriers of mobile VoIP.. 10
2. Methodology.... 11
3. Technical challenges for mobile VoIP .... 13
3.1. Introduction: the various types of mobile VoIP ...... 13
3.2. User experience.... 14
3.2.1. Usability ... 14
3.2.2. Availability 14
3.2.3. QoS... 15
3.2.4. Summary . 16
3.3. Current networks; WiFi, 2G and 3G.. 16
3.3.1. Encoding.. 16
3.3.2. WiFi coverage will remain spotty, but adequate for the home ...... 17
3.3.3. 2G networks are not suited for Mobile VoIP ..... 17
3.3.4. 3G networks: capacity trade-off ... 18
3.4. LTE networks: moving towards all-IP ...... 19
3.4.1. Technological enablers of voice and SMS over LTE ...... 19
3.4.2. Initial LTE rollouts will rely on CS fallback . 21
3.4.3. In the long term, Voice over IMS solution is expected.... 22
3.4.4. Roadmap for VoLTE ...... 23
3.5. Mobile handsets.... 24
3.5.1. 3G handsets .... 24
4. Player profiles and strategies.... 26
4.1. Mobile operators ... 26
4.1.1. Introduction: operators want to protect their voice revenues . 26
4.1.2. The different strategies of mobile operators ..... 27
4.1.3. Strategise on a national basis...... 30
4.1.4. Opportunities and threats ..... 31
4.1.5. Benchmark of mobile VoIP offered by operators ..... 33
4.2. Over-the-top players .... 46
4.2.1. Competition and strategies overview.. 46
4.2.2. Skype 47
4.2.3. fring... 52
4.2.4. Nimbuzz... 54
4.2.5. Tru .... 55
4.2.6. Other start-ups: Viber, TalkFree, Tango .... 57
4.3. Internet giants 59
4.3.1. Competition and strategy overview..... 59
4.3.2. Google ..... 61
4.3.3. Apple. 63
4.3.4. Yahoo! ..... 64
4.3.5. Facebook . 65
5. Key trends. 66
5.1. Mobile Video over IP services gaining traction...... 66
5.1.1. A comparison of the Video over IP offerings..... 66
5.1.2. Challenges of video calls ...... 67
5.2. Becoming the hub for all IP communications . 68
5.2.1. Google Voice synchs with Gmail . 69
5.2.2. Facebook further socialising the concept of communicating . 70
5.3. The battle between operators and VoIP providers for a better pricing proposition 72
5.3.1. VoIP over WiFi is not very mobile 72
5.3.2. Genuinely ‘free’ calls are rare ...... 72
5.3.3. International calls are very attractive, whether WiFi or not .... 73
5.3.4. How operator voice tariffs have become more attractive 75
5.3.5. In conclusion – international calls are only real advantage.... 78
6. Strategic analysis and forecasts ...... 79
6.1. Looking to the future .... 79
6.1.1. How much of a threat is mobile VoIP to operators? 79
6.1.2. How will the mobile VoIP competition structure pan out?...... 82
6.2. Forecast .. 84
6.2.1. Analysis of growth drivers and barriers...... 84
6.2.2. Forecast hypotheses ..... 84
6.2.3. Mobile VoIP forecasts, 2010 – 2015... 85

Tables

Table 1: Summary of user experience issues between managed VoIP, unmanaged VoIP (mobile) and
unmanaged VoIP (WiFi)..... 16
Table 2: Encoding data rates for various mobile services... 17
Table 3: LTE fallback schemes. 21
Table 4: Penetration of 3G handsets, 2009 and 2014 . 24
Table 5: Partnerships and acquisitions between operators and VoIP players 27
Table 6: National strategies of mobile operators... 28
Table 7: Tariffing of VoIP options..... 29
Table 8: National strategies of world operators..... 30
Table 9: The VoIP strategies of mobile operators in the USA.... 33
Table 10: VoIP strategies of mobile operators in the USA in detail .... 34
Table 11: The VoIP strategies of mobile operators in France...... 36
Table 12: Details of the mobile VoIP strategies of French operators.. 36
Table 13: The VoIP strategies of mobile operators in Germany .. 37
Table 14: Details of the mobile VoIP strategies of German operators 37
Table 15: The VoIP strategies of mobile operators in the UK ...... 38
Table 16: Details of the mobile VoIP strategies of British operators ... 38
Table 17: The VoIP strategies of mobile operators in Italy ... 40
Table 18: The VoIP strategies of mobile operators in Spain. 41
Table 19: Details of the mobile VoIP strategies of Spanish operators 41
Table 20: The VoIP strategies of mobile operators in Austria...... 42
Table 21: The VoIP strategies of mobile operators in Sweden .... 42
Table 22: The VoIP strategies of mobile operators in Australia ... 43
Table 23: Details of the mobile VoIP strategies of Australian operators .... 43
Table 24: The VoIP strategies of mobile operators in Japan 43
Table 25: Details of the mobile VoIP strategies of Japanese operators .... 44
Table 26: Overview of the VoIP strategies of mobile operators ... 44
Table 27: Table of international call tariffs for MNOs in the USA. 74
Table 28: How the Free rate plan has grown ... 76
Table 29: Monthly data plans for smartphones for the four national US operators.. 77

Figures

Figure 1: Comparison of price competitiveness between mobile VoIP and MNO plans 10
Figure 2: Breakdown of mouth-to-ear delay .... 15
Figure 3: CS fallback architecture ..... 19
Figure 4: VoLGA: Voice over LTE via Generic Access . 20
Figure 5: Voice over IMS.... 20
Figure 6: LTE deployment scenario of NTT DOCOMO. 22
Figure 7: World mobile data and voice revenues, 2010 26
Table 5: Partnerships and acquisitions between operators and VoIP players 27
Figure 8: Relation between openness to VoIP and degree of competition ...... 31
Figure 9: Trends in the market share of KDDI in Japan 32
Figure 10: Trends in the market share of 3 in the UK ..... 32
Figure 11: The A1 over VoIP offer 42
Figure 12: Connectivity offered by the over-the-top players ..... 47
Figure 13: Nokia N900, with pre-integrated Skype... 48
Figure 14: Skype on KDDI.... 51