Monday 22 October 2007

The death of the traditional cellphone operator

by Greg de Chasteauneuf

Today you buy a cellphone, insert a SIM Card and you are locked in to only make calls with that specific Mobile Network Operator (MNO). You may have the ability to roam between all available MNO's in your area, but you are still stuck to high call charges on those GSM networks. As the handsets evolve they begin to offer more advanced data capabilities (3G, Wifi and soon 802.16e - Wimax) the voice capabilities of the phone really just becomes another application on an intelligent device. This evolution starts to separate the applications on a phone to the underlying data bearer or carrier. The mobile phone is evolving into a device very similar to the PC, where the hardware and software are independent from each other and the voice provider you choice is merely an application or configuration on your mobile device.

Traditionally, the phone manufactures would embed a basic operating system, which would lock out third party developers from tapping into a mobile phone's resources. As mobile phones are becoming more and more intelligent and the mobile phone manufacturers are using operating system which allow programmers to develop applications for them, this is allowing startups such as*), and (to name a few) to develop applications which uses the phones hardware (such as the microphone, speaker and data bearer components) to make voice calls bypassing the traditional 'voice' GSM functionality. This is a huge leap forward and it challenges the voice providers; for the first time we now have access to a previously "locked down" handset. The user now has the ability to decide which voice provider they would like to use - this could be as simple as a pure price decision or access to value added features such as presence or Internet Messaging. This empowers the consumer to decide who they want to use as a VOIP provider. This maybe the actual MNO who is supplying their customer with data services but could also be an Internet Service Provider (ISP).

All this leads to a few interesting long-term changes in the mobile voice space:
1) The traditional MNO will continue to operate but might just become a data carrier
2) At some point calls will no longer be metered using time as a unit of charge but rather bytes
3) VOIP providers can offer voice services to a previously "locked down" customer
4) 2008 will see the introduction of Wimax (802.16e) handsets in the market; this means that Wimax providers will be able to offer IP carrier services to a handset for voice and data services
5) Providers who have access to Wimax (802.16e) spectrum can offer voice and data services seamlessly
6) Coverage is key in the voice space; new providers will need extensive Wimax or even Wifi coverage. Rooftop real-estate is become an even more lucrative business.

What this ultimately means is that prices will drop and value added features will flourish (goes without saying). The cost of operating a VOIP / Wimax network is substantially less than operating a traditional GSM/3G network. Besides cheaper costs per Mhz on the local-loop, new-age mobile voice providers will leverage off cheaper technologies such as Metro Ethernet back-hall, IP soft-switches, IP-IP interconnects (no expensive ss7), more efficient multiplexing algorithms, and enhanced features at a fraction of the traditional cost.

* In Fring's latest versions of the software the company have embedded a SIP (Session Initiation Protocol) stack, which in essence allows its users to configure any VOIP provider they choose. Not only can you make Skype calls via Fring you can also use your selected VOIP provider to make calls directly from the Fring application to any fixed or mobile number globally.


ChrisM said...

I am interested to see that there is no mentioned of Yeigo?

Greg de Chasteauneuf said...

Hey Christopher, there sure is... Check out 2nd paragraph "this is allowing startups such as*), and (to name a few)"

Anonymous said...

More Yeigo news here

Anonymous said...

Wow, sometimes I think I go blind while reading! Sorry about that! By the way.. new website is released :)