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VoIP revolution on mobile a threat to operators?

The emergence of VoIP, or voice-over-Internet protocol, technology has already helped to push down the cost of making a phone call by using the Internet. Mobile telephony is also becoming increasingly involved in VoIP technology, why does it frighten traditional voice operators?

VoIP on mobile saves consumers money

Mobile VoIP works with a cell phone’s 3G or LTE service to send voice calls over the Internet and via an Internet Telephony Service Provider. Mobile VoIP phone users and especially smartphone users can benefit from lower costs when calling, texting or using other common smartphone services. VoIP software like Skype and Google Talk are widely seen as a threat to the revenues of traditional cellular operators in South Africa as it bypasses the voice networks and so is not billed by them. Mobile VoIP dialer programs are available free of charge and enable users to make free VoIP calls when they are connected to the Internet. In a bandwidth rich environment calls effectively become free, and even in a bandwidth starved environment like South Africa, VoIP can save broadband users a great deal of money.

Eg. With a common South Africa 1 GB HSDPA package of 50c per Megabyte. VoIP programs like Skype use in the region of 500 KB per minute, which means that call costs to other Internet and Skype connected mobile phones can be as low as 25c per minute (Source: http://mybroadband.co.za)

WhatsApp a “game changer” for VoIP mobile

WhatsApp plans to launch mobile voice services in 2014 and this frightened many traditional voice operators, because it directly threatens their main income generator – voice. There are several reasons why Whatsapp, recently acquired by Facebook, should be consider as a game changer. Firstly, this application already has a huge user base and the increased availability of cheap Android smartphones that can run WhatsApp is a further concern for operators. Operators consider that VoIP on their mobile networks will have an important impact on Voice Service, leading them to implement higher rates for VoIP traffic traffic they detect on their data networks. Vodacom alsos plan to charge differently for VoIP aren’t too worried, they think that it will be a good opportunity for them to distinguish from competitors — those who invested a lot in data network and those who didn’t.

MTN and Vodacom have increased the price for VoIP traffic

Traditional Voice Operator claim that VoIP on mobile phone still have problems, such as end-to-end quality of service, which is not always up to standard. However, considering the savings that VoIP offers, and as mobile VoIP applications become more ubiquitous it is difficult to see why many people would not make sue of the service more often. One of the operator’s strategic discussions is to charge higher fees for VoIP traffic on their data network. It is interesting to note that MTN and Vodacom have both filed separate, higher rates withICASA for VoIP traffic and they reserve the right to charge different rates for VoIP traffic in their terms and conditions. If MTN and Vodacom decided to implement the higher rates they filed with ICASA they could effectively kill the value proposition of third-party VoIP applications that rely on their mobile networks. A VoIP call from your smartphone could cost you anything from R4.39 to R36.62 per minute if Vodacom and MTN wanted to.