The Inevitability of Mobile VoIP

It’s an interesting time for mobile VoIP. Just a few months ago it seemed to be a failed business model, considering the flameouts of a few high-profile over-the-top services. But it’s seen a reversal of fortune lately thanks to new sea changes in the industry.

For instance, on Thursday, the FCC will take a vote on issuing a Notice of Proposed Rulemaking in the net-neutrality debate – the organization would like to turn net neutrality principles into rules. Meanwhile, there’s no love lost lately between AT&T Inc. and Google Inc., who have been trading sharp letters over how Google Voice should be regulated, and whether it’s even a telephony service. That hasn’t slowed the uptake of the Web application’s beta version, which unifies existing ‘phone numbers and offers discounted calling and texting. And, the rise of smartphones has put mobile VoIP applications like Skype firmly on the mainstream consumer’s map.

“There are a ton of different business models around mobile VoIP that are emerging and compelling,” Frank Dickson, analyst at In-Stat, told VON. “It’s not just one thing, but rather a collection of different market attacks.” In-Stat projects that by 2013, mobile VoIP applications will generate annual revenues of $32.2 billion, driven by over 278 million registered users worldwide. One big development is that revenue and users associated with mobile VoIP will be evenly distributed – not just among online mobile VoIP services, but 3G-based mobile VoIP offerings and WiMAX/LTE mobile VoIP offerings too.

Cellular VoIP of course has been in the news thanks to AT&T allowing iPhone users to run VoIP on its 3G network, not just on Wi-Fi. That’s a development that, along with mainstream smartphone consumption, has kickstarted the idea of carrier-sanctioned VoIP. In-Stat analyst Allen Nogee believes AT&T has been watching the FCC become more serious about network neutrality in the mobile space, so it likely thought it was only a matter of time before it was forced to allow these applications anyway. But he says it will be a slow burn when it comes to bread-and-butter voice cannibalization.

“Currently, many high-voice usage customers are business customers,” Nogee said. “These subscribers likely won’t switch to VoIP in the near-term as their business pays for their service. Still, the AT&T announcement will have long-term implications for the current U.S. cell phone billing model. If AT&T and other operators can’t charge high prices for voice, they will likely make it up by raising prices for data.”

When it comes to 4G, mobile VoIP becomes both a threat and an opportunity for operators. “WiMAX seems to be approaching the market as a wireless broadband alternative for competitors, new players without previous spectrum to monetize,” said Dickson. “If it’s billed as enhanced wireless DSL, mobile VoIP makes a lot of sense in terms of loading a client on a computing type of device.” And indeed, Sprint-Nextel Corp. and Clearwire Corp. in the United States have both embraced the idea of mobile VoIP on their 4G networks.