Monday, April 16, 2007

Why mobile and landline phone calls will soon be free

Thomas Anglero is one of the big VoIP experts. He was a senior executive adviser with Telenor AS, CEO of Free World Dialup, VP of Vocaltec Communications and CEO of TrulyGlobal. So we might expect from him only a positive view on the the VoIP industry. Also because he is still attached to it as CEO of Nuclei Networks, a VoIP service provider in emerging Balkan markets.

But his latest blog entry sounds more than depressed to me. Under the emblematic title „VoIP's tragedy was foretold by Hamlet“ he writes:
VoIP is a 1/3 of penny numbers game with margins so low that micro-credits used in Malaysia by mobile operators have higher margins then VoIP. Think about this...

At Fall VON last year, the head of Yahoos! VoIP service told a story about how the head of accounting called him into a meeting to question his reasons for continuing its VoIP business. She informed him that the average margins for Yahoos! services are around 80% and his VoIP business was almost impossible to calculate...she asked, "why are we in 'this' business?"

Sad words. But only from a company's standpoint. The clients might think differently.

I suppose this actual development is just the way it goes and we are on the verge of a big paradigm shift. Phone calls aren't meant to cost anymore. They will be free. Like emails disappeared the written letter and the payment for the postage stamp. I would love to see it and already realize it on a smaller scale, by convincing my friends to use VoIP so that we can make free on net calls.

And there is more to come: If you use the SIP standard cleverly every phone call can be free, even mobile calls. One way to achieve this is the fwdOUT™ Phone Sharing Network.
The fwdOUT™ Network is a system that matches callers with other users that can complete the call for them at no charge. The only catch is that to make some calls, you have to let others use your phone. fwdOUT™is free and not to be used for commercial purposes.

For Instance, Erik lives in New York City, and he gets free local phone service, his family is in Holland. Joe is an expatriate from New York living in Holland that calls New York on a regular basis. Using the Free World Dialup Phone Sharing Service, Erik shares his number. Joe also shares his number. When Joe calls New York, he uses Erik’s line and Erik uses Joe’s Line. The sharing is not done on a one-on-one basis, members share with the entire community and accumulate credits when their line is used. These credits can be used to place calls through other member’s phones. Free World Dialup maintains the tallies so that no line is used more than the owner has permitted.
Critcs said that fwdOUT™ doesn't work good. There are too many dead routes, because only few people know it. But the idea is brilliant and with a little grassroots marketing it can become bigger. I think that it's no big problem that you need an Asterisk server to become a member of this free call fraternity. Asterisk is every time easier to install and there are pre-configurated packages. Also you don't need a full fledged personal computer anymore to run it. Asterisk can run on small, fanless, quiet industrial PCs that spend few energy. There was even a competition to install it on an Apple TV. Another way is install Asterisk on your web server, which you can get für 3 Dollars a month. But the most elegant way seems to me to use the web based Asterisk PBX that you can get for free at

Other companies, like 4S newcom, are working on the mobile edge. For costumers they can equip their IP PBX with SIM cards of all German mobile phone providers. Of course with flat rate tariffs, so you can ring the PBX and it calls you back for free. Once connected you can, theoretically, use the fwdOUT™ service or every other VoIP provider which connects you to the world for free. For instance Voipstunt, which offers free calls to 40 countries and the rest of its destinations very cheap. Voipstunt is one of the many brands of the German company Betamax. Their prices are so cheap that people from all over the world use them. I recently read comments in a forum by a Brazilian who does all his local calls with Lowratevoip, another Betamax company. Having compared lots of VoIP providers in the last time I suppose that they are a real menace to the industry, undercutting nearly every other offer.

So what will this all lead to?

I would no be surprised to see some kind of „war“ start very soon. It's the big incumbents and the mobile operators against the thousands of small VoIP companies. First signs are how Vonage gets pushed out of business with a lawsuit by Verizon and the crippled Nokia N95 which Vodafone and Orange sell to their costumers in the UK. People where quite surprised to see that they cannot use VoIP on their branded N95, which normally can.

But to me this mutilation seems quite reasoned. From april 2007 the City of London will become the biggest wireless Internet hotspot in Europe. This means that in Europe's most important finance and economy center the people can call for free or very cheap by using VoIP on their cell phones, circumventing the traditional mobile networks.

The big winners will be SIP phone companies like Truphone or Sipgate. Where there is bandwith there you can make calls. It seems that the standardization of VoIP in SIP has opened a Pandora's box for all telecommunication companies: With SIP you can tie every phone system together, as you see in fwdOUT™ and 4S newcom's IP PBX. More and more bridges are being built to make free phone calls. The people like it and companies can soon only charge modest prices for the bandwith. Voice will become "just another application", as techies use to say. Or, as a comment on Gigaom states:
It’s becoming a tired catchphrase, but it’s no less true for its’ repetition: All voice is converging towards free. It’s just another service on your dumb pipe: It makes no more sense to pay a per-voice call charge than it does a per-website visit or a per-email fee. I don’t regard myself as a bleeding edge adopter, but these days about 85% of my calling is on-net (Either Skype or one of the zillion SIP networks that operate here in Oz). It’s a bit cumbersome (Prefix dialling for the SIP network, then the users’ own 86 digit SIP phone number), but I’m viewing that as a temporary aberration.

I’d say the days of PSTN arbitrage (which is really what the VOIP providers are) are coming to an end. I’m cheering FON and others on too, so that soon enough the days of GSM arbitrage will be over too.

Paying a phone bill is so 80ies style!

(Read my next blog posts „More tricks for free phone calls“and „Tpad to involuntarily offer free phone calls worldwide?“ to learn more.)

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