Tag Archives: skype

Telcos in a Clouds & Pipes World

The previous post might have look pessimistic about telcos when defining the future of telecom as “Clouds and Pipes (and Toys)”. In reality, it is just an analogy to describe what is already happening with “Over-The-Top” players delivering applications and services through Internet telco’s infrastructure with more and more intelligent devices.

How can Telcos find new opportunities in the new model? Telcos have some assets that could be valuable to Clouds and the end-users :

– Trusted billing relationship with users

– Customer profile: location, travel habits (roaming statistics), spending habits, response to promotions, home address

– Trusted brand to deliver a reliable service

All these assets can also be easily bypassed and ignored by over-the-top players. One example is Skype. Millions of users have a direct billing relationship with Skype for SpypeOut and SkypeIN. Skype has a customer profile no second to telco’s, including credit card information, billing address, Paypal behavior, country and contact list.

But a more profitable approach for the operator has been taken by Apple with iPhone. Apple is also an over-the-top player with a direct billing relationship with customers for iTunes, including its App Store, that sells more over-the-top applications. Still by partnering with telcos to sell the iPhone through them with mandatory flat fee plans for voice and data, Apple has help telcos to retain at least voice as a telco service and give users a reason to subscribe to unlimited data plans, that will support Apple apps.

Even if iPhone ever supports Skype, why would anybody use it if you already have voice as a flat fee?

The video clip is an interview from Om Malik to Josh Silverman of Skype

3G brings Mobile Broadband at last

I just discovered this interesting graph in Brough Turner’s post 3G’s biggest success is as a dumb pipe.

The graph highlights two main points: 1) 3G data trafffic has increased more than 10 times in Finland, and 2) 92% of that traffic is Internet Access from PCs. UMTS modems and Data Cards in combination with emerging data flat rates are making mobile broadband a reality. Another reading from the graph is the comparatively low growth from Symbian devices, mainly due to the poor usability of its handset browsers.  iPhone’s Safari and Android’s WebKit based browser will surely outpace Symbian in data traffic when they reach Finland.

Skype and IMS should benefit from true broadband IP access. Once there is a proper wireless pipe, IMS becomes key for telcos to own the subscribers and provide value-added services. For the users, IMS brings a richer communication, Skype-like, only that this time carrier-grade.

Skype service is absolutely great, but would you rely purely on it as a replacement of your mobile line? Wouldn’t you trust an Skype-like service (with presence, IM, network address book, high-def videocall, file-sahring, etc) if offered by AT&T, Vodafone or Telefonica instead?


Will we ever use video calls?

Videocalls are available in UMTS networks and supported by most 3G handsets in the market. Still, how many people do actually use it? Have you tried it yourself?

Among the factors that prevent people from video calling, the privacy issue is one of the main concerns. You do not want your boss to videocall you and find that you are not working from home as you told him. Other people are shy to be seen in a videocall because they do not like to see themselves in video. And then, there is the uncertainty whether the other party has a 3G phone and whether your friend will like to be disturbed by an intrusive videocall. Other factor not to dismiss,  is simply that people do not have in their mind that they can do a video call from their phone. In other words, they are not educated to use video calls.

Whatever the reasons, the fact is 3G video calls have not taken off (yet).

Still video adds significant richness to communications, compare to audio only, be it for 3G video calls or video conferencing in general. I do use Skype video calls with my family and friends, and once you are used to it, you do not want to do voice only. Skype says that 28% of the calls between users are video calls.

Clearly video calls are not to be used for all communications. Same as sometimes it is more appropriate to use SMS than a phone call, in many cases an audio call is preferrable to a video call. Texting is less intrusive than a phone call, and a phone call is less intrusive than a video call. Still for a more intense communication video is a better option, but you might want a degree of intimacy with the other party before opting for video.

In the enterprise segment, videoconferencing is clearly growing and the ultimate video communication tool, Telepresence, is getting traction. Corporates do find value in video communications. As with many other technologies, enterprises are adopting first and consumers will follow, as it happened with mobile phones, laptops or mobile email.

Skype, and all new laptops with webcam incorporated, are set to be one of the drivers of video communications. The agreement with Jaman to insert movie clips in Skype calls, as reported by GigaOm and TechCrunch, should only help to add more value to our video calls, and incentive its use.

Coming back to 3G, as UMTS handsets become affordable for teenagers (the greatest early adopters of new ways of communication) I would not be surprised to see 3G video calls taking off soon. These kids have grown used to being recorded in video since birth, so the shyness factor clearly disappears. They use the phones in many ways most of us can not do, and do not expect video to be an exception

If James Bond and Austin Powers used video calls in the seventies, wouldn’t the twenty first century kids do it too?


IMS Vs. Skype

IP Multimedia Subsystem or IMS is an architecture standardized by 3GPP, 3GPP2 and TISPAN, that is the choice of telcos to implement not only VoIP, but also other multimedia services, such as videcalls, presence, instant messaging, push-to-x, videosharing, on-line address book, etc.

As an user, you can envision IMS as a service similar to what Skype offers today but standard-based, with assured quality of service and fully inter-operable among different telcos.

IMS software clients will run on different devices including handsets, PC/laptops and IPTV Set-top-boxes.

AT&T U-verse Voice is already based in this kind of technology.

But, if Skype is already free, why do we need IMS?

1) To avoid ending in a monoploy situation with Skype. As telcos adopt IMS, users will be able to choose their favorite service provider, and that will not impact what buddies you can talk to. E.g., you can not access Yahoo IM or GTalk users from Skype. Once Verizon, AT&T and Sprint have all IMS, you will choose your preferred operator, say AT&T, and still reach your buddies at Verizon and Sprint.

2) Quality of Service. IMS provides for guaranteed bandwidth. This will enable Hi-Def (1080) video calls, that best-effort Internet can not sustain.

3) Carrier grade service, including Emergency Services, not available from Skype.

4) Access from multiple devices and network access. Coupled with IPTV and Femto cells, as an example, you will be able to receive SMS, IM or calls on your TV screen or on your PC, even if you have been called on you cellular. With Femto cells, your presence info could be automatically updated when you reach home. Other services bundled with IPTV would include video conference from the TV, or having a voice, video or chat session open with friends on TV while watching the Super Bowl.

5) Open architecture, including a SDE (Service Development Environment) for developers to add Applications blended with your IMS Service. Applications such as those available in Facebook, could be made available on the IMS Service, bringing to power of Social Networks and Web 2.0 together with IMS.

Skype is a great service, but the potential is bigger with IMS, mainly because of the competition it would generate among telcos, that would drive more innovative applications and a better service at the end of the day.

Why Google should buy Skype

Add GMail, Google Docs, Google Calendar, Salesforce.com and Skype in a package. Is there a better value proposition for SMEs and SOHOs for their IT and Communications infrastructure?

Add a Linux distro for the business desktop, supported by Google, and you have a killing package for the small and medium business, with an unbeaten TCO.

Google is determined to enter into the corporate market, as the recent partnership with Salesforce.com demonstrates. Large enterprises and multinationals might be reluctant to outsource part of their IT to Google, arguing concerns on security. Yet Google Data Center is more reliable than most corporate data centers. A fire two years ago in their Data Center sent hundreds of servers into ashes. No Google end-user was impacted.

It might take longer to convince large companies, but for SMEs the proposition is too strong to be neglected. Skype, with SkypeIn and SkypeOut, plus Google reliability, is a terrific solution for enterprises, benefiting not only from cheap voice, but also from IM, Videocalls, file-sharing, and potential integration with Gmail and Google Apps.

Microsoft should be worried.

How much is Skype worth?

eBay announced results, and Skype was part of them. Skype revenues have increased 61% year-on-year to reach $126M. Skype added 33M new users for a total of 309M. Skype makes most of its revenue with SkypeOut, where the tariffs barely cover the interconnection costs to finalize the calls in the telco’s networks. So even if revenues grow, the margins are still slim, and there is no outlook that the margin will improve unless there are new (paid) features or the business model changes.

Even if the number of users would grow exponentially, that would also have an impact is cannibalizing SkypeOut, as some users move from traditional phones to Skype, making SkypeOut not required to reach them.

Being optimistic we could forecast net profits in the range of $10-$30M per year, that at a Price-Earning Ratio (PER) of 15 would value Skype at a maximum of $450M.

As a user, Skype rocks. Technically it is superb: very wise P2P concept, high voice quality with bandwidth adaptation, very decent videocalls, IM, file sharing, SkypeOut…  Even with a proprietary technology, non-IMS compliant, it delivers all that IMS promises to deliver. Absolutely great.

But the value to the user is not necessarily related to the market value of the company. eBay is aware of that, and according to GigaOM, expect news over the weekend. TechCrunch predicts that an alliance with Google could be coming.

Why we need WiMAX?

TechCrunch post today about WiMAX, Why Cable And WiMax Shouldn’t Mix, clearly misses the point. Their two conclusion items are misconceived, not to say wrong:

1. TechCrunch says: “WiMax is more an alternative to fixed broadband Internet access than it is to mobile phone service
TechCrunch seems to ignore that WiMAX Rev-d brings mobility and it is the one being deployed now in many operators. Wimax is about mobile broadband, something 3G operators are supposed to provide, but they only do at a prohibitive price, due to lack of competition.

2. TechCrunch brilliant idea: “It no longer makes sense to try to own all the pipes because pipes are becoming a commodity
It seems that for TechCrunch it makes more sense to invest billions in Social Networks, Speech-to-text start-ups, with no business case to make a profit, than in a business to provide a communication service for which customers are willing to pay. Ask telcos, where their billions in profit come from… yes, from those “commodity pipelines”
Network infrastructure is an asset. Millions of users of a free service, e.g. Skype, is not necessarily an asset. Ask eBay what they think now of the multi-billion valuation of Skype, that they later wrote-off.

As a user, I welcome WiMAX to bring more competition to mobile communications in something mobile operators have failed to mass market: Mobile Broadband. Partly due to mobile telcos greed to over charge data based on volume, partly for their fear to congest their spectrum, we are far from ubiquitous wireless IP access.

WiMAX is a disruptive technology with better spectral efficiency (higher bitrate for the same spectrum), designed with IP in mind, and backed by Intel to be seamlessly supported in laptops, the same way Wifi is today. But WiMAX operators will not only do Mobile Broadband. The guys at TechCrunch have probably heard about VoIP. By deploying IMS, these operators will be able to offer voice, video, presence, IM and many other services from a WiMAX handset. Can that compete with a 2G/3G mobile phone? Skype is the proof that it can. IMS just enables a Skype-like service but carrier-grade, with QoS control provided by the network.

TechCrunch might have jump into WiMAX only because of the fiasco for Xohm in the US market, but WiMAX is taking off in other markets (India, Taiwan, Korea, Malaysia), and hopefully this new backing from Comcast, Intel, Time Warner, Google and Brigh House will bring WimAX to US too, the big way.

Still skeptical, GigaOM addresses the story with more detail in: CableCos Join The $3 Billion U.S. WiMAX Rescue Act