Skype 101 for Carriers: A “Voice On The Web Primer”

Apparently the Skype-Nokia partnership announcement has irked some legacy European carriers such as Vodafone, O2 and Orange according to Mobile Today:

A rift has emerged between Nokia and operators over its plans to incorporate Skype onto its Nseries handsets, Mobile has learned.

O2 and Orange responded furiously to Nokia’s declaration that it will equip its upcoming flagship Nseries device, the N97, with Skype.

If the row is not resolved the two operators may refuse to stock the N97 – or any future Nseries handsets containing Skype – unless Nokia strips out the Skype client. The two operators are understood to have vented their anger in high-level discussions, which involved group level executives from Nokia.

However, Hutcheson’s 3 has seen great success in providing access to Skype for calling Skype contacts, making SkypeOut calls, exchanging presence information and holding text chat conversations. For the past year I have been making calls to Skype contacts from my BlackBerry 8820 and Bold via iSkoot and IM+ for Skype over my Rogers subscription. And I have been beta testing Truphone for BlackBerry.

Unfortunately for these carriers they did not attend last year’s eComm conference where iSkoot CEO Mark Jacobstein made a presentation “Operator Friendly VoIP: No Longer an Oxymoron”.

So what’s the background and where can having Skype access as a carrier offering be of a win, not only for Skype and its partners such as iSkoot, but also for the carriers:

The background:

  • A scalable, robust channel for handling voice over wireless already exists. The data channel can transmit text plus information related to setting up a voice call.
  • Device resource issues, especially battery life but also processor speed, memory resources and display issues, challenge the ability of current smartphones to handle calls using a VoIP client at a sustainably satisfactory level of reliability.

iSkoot.Architecture1.240pxRecall the basics of the architecture and voice call process:

  1. Use the data channel for handling text messages and the information required to set up a Skype voice call session
  2. Use the existing voice channel for making the voice connection from the mobile device to an iSkoot/Skype/etc. server via a “local” point of presence.
  3. The client on the device is designed to handle Skype IM over the data channel; however, when a voice call to a Skype contact is initiated, data for setting up the voice call is sent to the server. The server then triggers a wireless call from the server back to the mobile device while also calling the party on Skype from the Skype session on the server. (Effectively the Skype session on the server uses a variant on Skype’s inherent multi-party calling feature.)

Why is this architecture carrier friendly?

  • Carriers continue to obtain revenues for local minutes
  • Data plans are required to handle text and the call setup information
  • There are NO termination charges for calls to Skype contacts
  • Carriers can share in the revenue for SkypeOut calls
  • The ability to advertise “free calling worldwide” is a very attractive marketing message for customer acquisition.
  • At least in the case of the Skypephone, actual hardware costs eliminate the need to subsidize the handset. This advantage will obviously vary by device vendor.

AT&T eventually recognized that the iPhone presented a significant market share grab opportunity for recruiting customers away from its competitors. 3 accelerated its rollout of Skypephone once it saw the market response in the UK. New carriers launching in Canada and the U.S. will be looking for programs to attract customers from the incumbent wireless carriers. Thinking outside the traditional business model is necessary for carrier survival; cost effective innovation, for both the customer and carrier, will always win out in the long term.

Vodafone, Orange, O2 and others will have to succumb to the market reality that the Skype offering is a win-win for those carriers that adopt phones incorporating this implementation of Skype mobile software and architecture, whether Nokia, Android, BlackBerry, Palm Pre or any other smartphone with an inherent multi-tasking capability.

  • Skype Integration On Handsets: Threat Or Opportunity For Mobile VoIP Startups? (techcrunch.com)
  • Nokia to preload Skype onto handsets beginning in Q3 (mobilecrunch.com)
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About Jim Courtney

Bringing over thirty years' experience in the sales, marketing and management of cutting edge technology businesses.

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