Voice over Internet Protocol (VoIP)
...phin, most Cable Companies & Phone Carriers The benefits associated with this solution are: ¡V Most flexible and easy to use solution (no computer required or software to install) ¡V Offer higher voice & service quality ¡V Include enhanced features relating to landline use (e.g. e911 access) While the Challenges associated with this solution are: ¡V Higher startup costs: Adapters require a modem/router - if not included in the package the customer needs to buy one (approximately 100 Euros), as well as installation and shipping fees ¡V Routers and adapters need to be upgraded or rebooted unlike a telephone jack ¡V Sometimes require a 12-month contract B. Software-based VoIP services „X These are user friendly systems that require computers with compatible programs (& built in speakers, microphones or USB headsets) at both ends and a broadband connection in between „X VoIP providers that offer this service are: Skype, VoipBuster, SIP Discount, GoogleTalk, Yahoo Messenger & Microsoft MSN The Benefits associated with this solution are: ¡V Less expensive VoIP option with PC-to-PC calls free ¡V Ability to upgrade easily via Software ¡V Potential for tight integration with other Email & Web-based services (Call Centers, Videoconferencing & Click-to-Talk Web pages) ¡V Portability - You can take your number everywhere provided there is a broadband connection The challenges associated with this solution are: ¡V PC must be on for VoIP to work ¡V Voice quality is improving but not as good as Hardware-based VoIP ¡V Some services restrict the caller to limited numbers (e.g. GoogleTalk & Yahoo Messenger (betas) only allow you to talk to other subscribers of the same service) ¡V Most lack complete call and receive interconnect services to public phone networks What is the status around the world? A major development starting in 2004 has been the introduction of mass-market VoIP services over broadband Internet access services, in which subscribers make and receive calls as they would over the PSTN. Since that time, at least 1500 VoIP providers have been established around the world, and major commercial transactions have taken place at a corporate level. A selection of transaction is listed here, to give evidence about the size of the market and the expectations for the future: ______________________________________________________________ ______________________________________________________________ At the same time, consumer awareness and market penetration varies extensively by continent . A. The US landscape is as follows: „X Today, 18% of Americans (approx. 4 million users) use VoIP services, showing a remarkable increase of 250% in the last 18 months. „X There are around 1,100 VoIP service providers in North America (Sept 2005); these providers include Cable-TV companies, Telcos, ISPs & Internet-based companies presenting a highly diversified landscape. „X Cable companies and Telcos account for 18,1% of the minutes in North America (this percentage was less than 5% in 2004). „X The diversity of VoIP service providers, and the silent preparation of major stakeholders in this area (Microsoft) point to the probability of a major shakeout of this industry within the next two years. „X US Cable Companies are in an excellent position to bundle services that include Web-based calling, fast-internet access & hundreds of TV channels plus they have the marketing budgets to push VoIP services Cable companies also have technical professionals to provide support. „X Smaller companies (e.g. Vonage) however can respond to market changes and customer demands with more flexibility „X There are low expectations for WiMAX adaptation in the US in the medium term. B. The European landscape is a C. s follows: Despite the hype, VoIP is still in a nascent stage in Europe, and will only account for 10% of minutes and 4 % of revenues by 2010. A market research that took place in Oct 2005 and was conducted by Forrester, indicates that VoIP awareness among European consumers is very low. 70% of European consumers are completely unaware of the service, while 96% (!) have never used it. How it makes money? It is hardly surprising that VoIP phone service is taking the world by storm (especially in the US). Promising unlimited local and long distance calling for as little as $199 per YEAR, this represents yearly savings of over $500 for many phone users. In addition to the substantial cost savings, VoIP service delivers a tremendous array of features all included in the low monthly fee. The interest VoIP is generating both from residential customers and SOHO businesses has resulted in the emergence of hundreds of VoIP providers and more service providers are appearing on a weekly basis. The capital expenditure and operating costs required to run a VoIP business are minimum, while at the same time there practically exist no barriers to entry (licenses, regulation). A major development starting in 2004 has been the introduction of mass-market VoIP services over broadband internet access services, in which subscribers make and receive calls as they would over the PSTN. In this respect, a variety of operators from highly diverse business areas have integrated VoIP services into their service portfolio: „X Cable TV companies „X Traditional fixed and mobile Telco¡¦s (BT, E-Plus, etc) „X Internet Service Providers (AOL) „X Internet-based companies (eBay, Google) The Business Model In principle, the model is simple: „X Low cost is allowing VoIP providers to offer free calls between VoIP users and unlimited calls to PSTN and selected international destinations at a flat monthly fee. „X Small margins are compensated by mass adoption, thus generating large revenue streams There are additional reasons for different VoIP providers to enter this market: „X Cable TV companies: exploit existing infrastructure; bundle with own services „X Traditional Telco¡¦s: reduce network/transmission costs, defend customer base and increase loyalty, integrate fixed/mobile telephony „X Internet Service Providers: push internet broadband subscriptions, bundling of services „X Internet based companies: increase site accessibility, attract new customers, advertisement Obviously, the more robust players (cable TV, Telco¡¦s) manage huge advertising budgets, allowing them to push their VoIP offering more successfully and pre-empt low budget competitors. The best VoIP providers will offer many features for little or no extra charge; these include: „X call waiting „X call forwarding „X voicemail „X incoming and outgoing fax calls „X three-way calling „X signature ring tones „X tone-blocking for telemarketers „X automatic redial „X 24/7 customer support We have attached the pricing models of a number of international and Greek VoIP service providers in order to facilitate the comprehension of the business model. International VoIP service Providers Greek VoIP Service Providers The Challenge of VoIP over WiFi Voice over Wireless -- the merging of VoIP and Wi-Fi -- is expected to be the "next big thing" in wireless communications. A recent study showed that more than 75% of network operators and service providers surveyed have identified mobile VoIP or VoFi as a top priority for new metro Wi-Fi networks. VoFi promises higher voice quality and more reliable coverage indoors than traditional cellular service, and it quickly gains stature as a competitor to mobile broadband data. Moving packets through a WiFi network uses significant overhead. Combine this with the relatively small packets for VoIP that must be sent at regular intervals, (e.g. every 20 ms) and the overall system becomes relatively inefficient ¡V regardless of what network architecture is employed. Figure: Structured Mesh Networks over 64X better at 4 hops and beyond (log Scale) Where VoIP consists of the hardware and software that enables people to use the Internet as the transmission medium for telephone calls, VoWiFi is the wireless version of this technology that is designed to work on wireless devices such as a laptop or PDA. Some may wonder why a person or organization wouldn't simply use a cell phone for mobile communications, but again business and organizations can take advantage of a decreased communications cost while having a mobile system that offers more reliable coverage indoors and higher voice quality than traditional cellular service with VoWiFi. New market of wireless communication Along with added benefits to business and those with a need for wireless communications, VoWiFi also opens up the door for a whole new market of consumer products such as a standalone VoWiFi handheld. Many cellular phone companies such as Nokia and Motorola have already announced dual-mode cellular phones that will support seamless roaming from WiFi to cellular networks when WiFi is unavailable to a caller. That is one of the biggest challenges facing VoWiFi ¡X roaming access. A WiFi access point offers a communication range of up to 90 meters (commonly called a hotspot), and continuous conversations would mean that the caller must stay within an area of overlapping hotspots, or as already suggested, have a VoWiFi dual-mode phone that would switch to a regular cellular phone transmission when the caller moves out of a hot spot range. Communicating using VoIP over Wi-Fi is something many people are paying close attention to. Cellular companies aren't feeling too threatened yet due to some of the more serious problems facing VoWiFi; like roaming access and security. These issues may take years to iron out, if they ever are. It can be said that not many people really expected to see the cellular phone industry take off like it did, and only time will tell if VoWiFi is truly the next big thing in wireless communications or if it's just the next great idea that consumers didn't quite get. VoIP in the Mobile market Mobile IP telephony won't sound the ¡§death knell¡¨ for mobile operators and their healthy profits. In fact, far from being a disruptive technology, it's firmly in the roadmap of most operators. The intrusion of Microsoft and Skype into mobile VoIP will not have a negative impact on the mobile industry. On the whole, it is a symptom of the general march of the mobile industry to an all IP environment. In February at the 3GSM Congress in Barcelona, Nokia launched a new handset, the 6136, which features integrated VoIP over wi-fi using Unlicensed Mobile Access (UMA) technology. UMA is seem by many as the cornerstone of fixed mobile convergence (FMC) and allows operators to offer live roaming between GSM and unlicensed wireless networks, particularly wi-fi and Bluetooth. The fixed mobile convergence theme continued at the CeBIT show in Germany, where Deutsche Telekom launched T-One, a converged fixed-mobile service using Nokia N80 and E60 devices. These GSM phones will also operate in VoIP mode on DSL, W-CDMA and Wi-Fi networks. The devices, however, will only offer VoIP calls from T-Mobile hotspots - or via their users' home Wi-Fi networks - and will not traverse the pubic Internet. What characterizes these and other fixed mobile convergence services is that although VoIP is used, it is not internet-based. They utilize SIP to set up calls irrespective of bearer channel, and let the user have a single number for the device. Other mobile VoIP clients, which are not based on UMA, tend to be internet-based and offer very little in the way of quality assurance. Skype, originally designed for PC-to-PC communications piggybacking the Internet from end to end, has a client for Microsoft smart phones and PDAs. Microsoft's own instant messaging suite, Office Communicator, now has VoIP capabilities in its mobile version. It might be fairer to call these Internet telephony rather than VoIP. However, just as Skype recognized the need to break out of the internet onto the fixed telephone network before it could make any money, the same is true in mobile. Recently the e-Bay subsidiary joined forces with mobile operator 3 to offer subscribers an opportunity to use its increasingly popular VoIP service over 3G networks. Other operators have been less than keen, citing complications about issues of security and service quality. Completely independent of the Skype deal, 3 Italy launched a VoIP service for international calls this month. The International No Limit tariff aimed at its 3G-subscriber base offers calls to 23 countries for five cents per hour. Current Analysis' analyst Bena Roberts approves. "By embracing VoIP, 3 Italy is showing the mobile world how to add value to its existing services, rather than to view it as a threat," he said in a report. If we argue that VoIP is a substantial threat to mobile operators' voice revenues then it means that we underestimate the opportunities it offers. VoIP could allow mobile operators an opportunity to provide communications services over the fixed network. The BT Fusion service is more to do with Vodafone's capabilities than BT's. Any mobile operator could team with a broadband service provider and...