VoIP: Not fashionable anymore

People who have used VoIP calls to make international calls will no doubt no the number of option available nowadays. Yesterday '3' released a VoIP phone in conjunction with Sykpe. While this will definitely be a boon for a lot of people, it makes me wonder how many similar deals will be coming soon.

An analysis in Register says, 'VoIP is Dead. It's just another feature, now'.

Think of Skype as a kind of parasitic virus that threatens to bring the host to its knees - but which can't survive without a living host. Bloggers and mainstream newspapers are another good example.

How so?

Well, Skype has no network of its own - it's simply an open protocol (SIP is more than one protocol, but bear with me) wrapped up in some proprietary bits. Apart from a few authentication servers, its only real asset is its "brand" - which isn't the most concrete or tangible line item to have on your balance sheet.

So at bottom, Skype needs somebody's else's network on which to operate. And because Skype has next to no income, and because its users can melt away as rapidly as they joined, it has no chance of attracting the capital investment needed to build a real network of its own, either.

(This is a problem for the entire VoIP sector - how do you attract capital when the price of the product itself is tending to zero? Only a fool would possibly see this as a good investment. Fortunately for Skype, it found its fool in the shape of Meg Whitman of eBay, who was dazzled by the Swedes' "front loaded" [translation: fictional] business plan).

All this means is that Skype is a kind of freestyle MVNO (Mobile Virtual Network Operator) - only without any contractual commitments, and utterly dependent on the generosity of hosts to permit it to operate. This isn't a problem when the access network is a commoditised and unrestricted internet connection - such as the home or the office network. But it's a huge problem when the user is out and about - because there's no ready host for the parasite to attach itself to.

So today Hutchison Wampoa, which owns the 3 networks, called Skype's bluff.

Hutchison has been pushing VoIP to the trapdoor for a while now. It recently killed the alternative "host" for the Skype-organism, by blowing away the business model for public Wi-Fi. 3 UK's excellent high-speed HSDPA network blankets much of the country - and you can access it from a laptop with a monthly tariff that's about the same as the price of an hour's Wi-Fi. If you're already a 3 subscriber, the network will throw in a USB dongle for free. If you need mobile data, you'd be bonkers to sign up to a Wi-Fi plan.

RIP, public Wi-Fi.

Ovum has another interesting analysis titled, '3 cosies up to Skype'

The bigger operators, such as Vodafone, T-Mobile and Orange, have all taken flak recently for alleged hostility towards customers using VoIP on their networks. Now, here comes 3, not only encouraging its customers to use VoIP, but bending over backwards to make it easy for them. That this initiative is being taken by 3 is no coincidence, of course. As the smallest and newest of the UK mobile operators, 3's best hope for growth is to disrupt the status quo wherever it can.

In the short term, 3 may be able to use the Skype phone effectively to boost its subscriber numbers. In the long term, though, if 3 is successful with the Skype phone, the X-Series and similar projects, it might end up creating its own strategic problems. Imagine the scenario: on your mobile phone you use Skype for phone calls, Hotmail for messaging, Google for search and directions, YouTube for TV and music. What do you need your mobile operator for? The answer could turn out to be: subsidising phones, carrying data packets, and dealing with problems & complaints. Does that add up to an attractive business?

Whatever the case, VoIP is no longer an 'it' term and maybe the next time i am upgrading the phone, i may think of getting one with VoIP hotkey on it.