U.S. mobile operators may one day offer cheaper international calling
based on their own flavor of VoIP, but that’s not stopping VoIP vendors
from trying to form relationships in the meantime.

At a hotel several blocks from the main venue of the Mobile World Congress (MWC) in Barcelona, Spain, Skype executives gathered for their meetings. Nearing the evening hours on that Tuesday, the room was mostly quiet with the exception of a few people toiling away after long days of show-related business.

But Skype executives were anything but subdued. They were excited to talk about the progress they had made with Hutchinson operator 3 in Europe and the prospects of working with more operators. Skype and other folks in the VoIP community say they’re not trying to replace what mobile operators offer but to add to it – namely, the use of more minutes. Once people discover they can make far more affordable international calls, they’re apt to use more minutes, the argument goes.

GSMA RECOGNITION
Last fall, Skype and 3 launched a handset that lets users make free Skype-to-Skype calls and send free Skype instant messages. The handset was developed by Skype and 3 in partnership with Qualcomm using the BREW platform. The phone was a runner-up in this year’s GSMA Global Mobile Awards in that it won the designation of “highly commended” after first-place finisher Sony Ericsson won for the W910 Walkman phone.

Jacobstein: Increasing interest in Skype and white- abel VoIP solutions.

The award was great recognition for Cambridge, Mass.-based iSkoot, a 65-person-strong company whose software powers the Skype phone. Getting the nod from the GSMA awards was a big thrill, and iSkoot is getting inquiries from operators around the world, including North America, Europe and Southeast Asia, says CEO Mark Jacobstein. “It’s fair to say there’s a high degree of interest,” both for solutions with brands like Skype and for white-label solutions, he says.

Of course, just because 3 is taking an aggressive stance doesn’t mean other operators will follow. “They don’t have much to lose,” says IAG Research analyst Roger Entner of the operator. “If you’re the smallest carrier in the country, you have to experiment. You have to take the road less traveled.” 3 Group also was the first major mobile operator to strike a deal with Sling Media back in 2006, he adds.

The phone with 3 isn’t the only mobile move for Skype, which boasts more than 246 million registered users worldwide. “We’re very conscious that the big base of Skype users wants to be able to use Skype beyond the PC,” says Gareth O’Loughlin, general manager/mobile and hardware devices at Skype.

O'Loughlin: Plenty of room for competition.

The Nokia N810 Internet Tablet is one example – it’s a pocket-sized Wi-Fi device with a slide-out keyboard that allows for Skype-to-Skype conversations and SkypeOut calls to take place on a Wi-Fi connection, including those through Boingo Wireless and EarthLink hotspots. Another example is represented with Intel mobile Internet devices (MIDs) with WiMAX and Wi-Fi capabilities, which are expected to allow Skype-to-Skype voice and video calls to be made on open networks.

CHALLENGERS
Naturally, Skype isn’t the only VoIP play out there. One rival is Challenger Mobile, a small Stockholm, Sweden-based company offering a white-label mobile VoIP solution. CEO Christina Sundman says the company has seen a lot more interest in its solution from service providers since the 3/Skypephone joint service announcement back in October. “It’s really good because it puts the light on the issue,” she says.

Sundman: 3/Skypephone announcement heated up the discussions.

Sundman points out that the big benefit for Skype users is calling other Skype users; it’s a proprietary solution, whereas Challenger Mobile’s solution is standards-based and allows end-users to make Internet calls to any number, without that number belonging to a specific operator or carrier. She suggests that rather than letting VoIP cannibalize revenues, operators could charge a flat rate each month. So far, Challenger Mobile supports Nokia E and N series devices.

Skype is getting used to having a lot of company in the space. “Our view is it’s a big space,” O’Loughlin says. “This is the direction things are going. There’s probably a place for quite a few players.” It wasn’t that long ago that Skype itself was considered a startup, he adds, before eBay acquired it for $2.5 billion back in the fall of 2005.

WHY THE NEED?
The expectation is U.S. wireless operators will be moving to HSUPA and LTE solutions within the next few years, and by then, they presumably could offer low-cost VoIP international calling without using third parties, so why use iSkoot? Jacobstein explains that it’s much like voice mail or any number of other services that carriers provide using third-party specialists. The same can happen with VoIP. iSkoot can power their VoIP solutions with any number of VoIP communities or provide a white-label solution. And with IP, it can boost voice minutes without requiring carriers to pay termination fees, historically a big expense.

A big differentiator for iSkoot is it uses the voice channel, not the data channel, he says. That’s far more operator-friendly than a lot of other solutions. Plus, he says, iSkoot is deep in the stack, so it’s not just an application. It’s tied into the call log and address book and uses a gateway that sits inside the carrier’s network operations center, allowing the connection between mobile devices and the IP cloud.

A lot remains to be seen in terms of how U.S. operators incorporate VoIP into their offerings. In the meantime, to say the VoIP players have their heads in the clouds could mean a very good thing.