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Cellcos prepare for IM onslaught

Shut out portals to whip up ARPU

One of the people we reached out to, to explain the potentially debilitating effects of IM going wrong for the big cellcos was Tommy Volsen, head of marketing and one of the founders of Followap Telecommunications, the company that it is providing the ability for Vodafone’s Instant Messaging service to interconnect with other IM systems, a deal that was also announced at the 3GSM show.

"Since that announcement at 3GSM I can tell you that 62 interconnect agreements have been signed among the various mobile operators,” Volsen began. "They are now positioning instant messaging as next generation SMS after struggling for three years with MMS (multimedia messaging service). Mobile email is bringing the operators negligible revenue and they are now moving at record speed. The connectivity for SMS took ages, but there is a real will behind the IM declaration, and this will happen fast.

"This is because all cellular operators everywhere feel threatened by internet based IMs. In Europe the cellcos have the right to block them, in the US it’s different and major carriers have offered branded IM on virtually every device.

"The problem with letting someone else’s IM on your mobile is that you have to open up an IP route in and out of your device to a remote server, and from that point on it can act as a launching platform for other services," Volsen said.

"In the US the operators had no SMS revenues to speak of and thought they didn’t have much to lose. But suddenly the IM suppliers have incorporated pictures, ringtones and blogging on their phones, and as you can see, next step is voice and video through the IM client.

Mobile IM client projections

Mobile IM client projections

“We have already received requests from US operators looking to review their strategy and try something like these non-US operators, and put their own interoperable IM system on their phone. But it won’t be easy," he said.

As for the Skype move onto the 3 network, Volsen thinks it’s just hype. "As I understand it, the move by 3 Sweden to offer a flat rate plus Skype, but it is only for PC cards, not handsets. In effect they are offering Skype on the PC with the connection going through the cellular network rather than say a Wi-fi hotspot. They have to pay for the data connection separately and this will actually cost more than using their phone to call directly, except for international calls made from a consumer's home country.

"It is disastrously inefficient, and will consume half a megabit per hour just to have the Skype client open. This is because the presence updating in Skype has not been altered for cellular, and it continually polls the device."

IM-based VoIP, such as Skype, and video conferencing, hardly ever works unchanged on a mobile service. There are issues for the network managing things like quality of service, and also when a customer roams, suddenly all packets addressed to the client have to divert to a new destination at another base station. This needs operator controlled complex MPLS style tunneling, to get it there fast enough, and Cellcos are hardly going to accommodate this for a portal that’s getting a free ride on its network, whereas they will for their own traffic.

"But it is Skype on a mobile that is one of the many things that has forced this IM declaration. Right now 3 is not in the IM alliance. Once IM is deployed in volume it will become the launching pad for video, VoIP and multimedia calls, just as Push to talk promised to be. People need presence information (what my buddies are up to right now)," and he listed key elements:

  • Communication, through text, voice and video
  • To share presence information
  • content delivery

"There is a lot of expectation here. If there are only 100m users of IM, the cellcos will count it as a failure."

As for the Followap product line, work kicked off on that around 1999, was completed in November 2000. It was first deployed by what is now Vodafone Ireland, followed by Vodafone Omnitel and its next job was connecting all the Vodafone subsidiaries so their customers could all IM each other from country to country. Vodafone has since added free IM roaming.

The system is also federated into the MSN network, and now Vodafone customers can IM with MSN users without having an MSN username, instead the individual is identified by a mobile number and can have their own nickname. It will work in much the same way, with the underlying principle of calling party pays. So even sending out of MSN to a mobile IM will cost money, with pre-purchased credits bought in the 100s of messages, for a very small fee.

Already Volsen says all the majors in France are moving ahead, with the France Telecom-owned Orange, Bouygues Telecom and SFR (Vodafone and Vivendi Cegetel owned) already switching their IM through Followap servers.

Copyright © 2006, Faultline

Faultline is published by Rethink Research, a London-based publishing and consulting firm. This weekly newsletter is an assessment of the impact of the week's events in the world of digital media. Faultline is where media meets technology. Subscription details here.

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