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Skype and Vonage: thank you, and goodnight

UMA kills the VoIP dream

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3GSM It's small, it's boring and won't turn any heads - but it probably spells the end of the road for Skype, Vonage and any other hopeful independent VoIP companies. It's Nokia's 6136 phone, which allows you to make calls over your home or office Wi-Fi network, as well as on a regular cellular network. UMA, or unlicensed mobile access, is the mobile operators' answer to the threat of VoIP - and now it's reality.

Many of Nokia's mid-range and high-end phones will feature Wi-Fi, and UMA allows the user to keep one phone number, one handset, and receive one bill at the end of every month.

"In three years," says Ken Kolderup of Kineto Wireless, which shepherded the technology through the standards process, "mobile minutes at home will be free".

A win for the customer, no doubt, but surely it's the death of the very utopian notion that a few guys in a garage would overcome the telecommunications incumbents - thanks to a "people powered" network.

Curiously, for a technology that was devised as a defensive weapon for the mobile carriers, it's the large former state-owned telcos who've been first to seize the UMA opportunity, with BT and France Telecom leading the way.

But Kolderup is quick to acknowledge the catalytic effect of Skype and Vonage.

"Vonage forced the cable guys to do VoIP, and both forced the service providers to do what they needed to do. If VoIP didn't occur, would they have done it? It was a kick in the pants for them."

Even Nokia acknowledges the risk of its traditional carrier customers losing revenues from home minutes going over the public internet, rather than their cellular networks.

But John Barry, who's involved in product development at Nokia for phones including the 6136, says it's an opportunity too.

"It maximizes their investment in ADSL, and allows them to bundle mobile minutes."

There are also capital expenditure savings, he says, because home Wi-Fi will mean they don't have to spend so much improving indoor call quality - notoriously poor in the United States, and on the higher frequencies used by 3G networks.

Kolderup agrees there are opportunities for mobile networks with free voice minutes at home.

"The number of minutes being used will go up - even as the revenue per minute will go down. So the deployment of UMA means you'll do revenue retention or revenue increase. If you don't do something these minutes will go someplace else. Do nothing, and you'll lose the indoor minutes too."

So what would Kolderup advise Skype and Vonage to do next?

"If you'd asked me a year ago I'd have advised Vonage to go public - which they have - and Skype to get bought - which they have too."

How about the VoIP guys bypassing their incumbents by building their own network?

"The cost is phenomenal," he points out. "And in any developed market I can't see it. It means acquiring the sites, building the towers, and providing the backhaul. In developing markets perhaps."

"The VoIP guys tend to be 10 guys in a garage. Owning and managing and operating an outdoor network is a different deal. It's hard and very expensive."

Even with WiMax or OFDM, which Kolderup describes as great "fill-in" technology, the incumbents have all the advantages.

"VoIP will never go mobile without the co-operation of the mobile operators."

Doubtless, there will be some people who don't mind having two handsets or phone numbers, but it isn't a market likely to excite the capital investment people.

So long then VoIP, and thanks for the free calls. ®

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