Monday, October 24, 2011

Is Telefónica going too far into digital with Jajah?

You can’t say Telefónica isn’t trying.

In 2009 it bought the American internet-based voice service Jajah – one of the first major VoIP moves by a major international operator.   
Then in September, as part of a larger restructuring, it created Telefónica Digital – a London-based division with the mandate to take the company beyond mobile into digital. 

And now Telefónica Digital has launched O2 Connect in the UK – a trial internet-based calling service for O2 customers based on Jajah technology.  It’s still a trial – and only works on WiFi – but how many operators are pushing forward into the internet-based, voice over IP (VoIP) world so bravely? Light Reading calls it a direct challenge to Skype and Google.

The new CEO of Telefónica Digital, Matthew Key, spoke earlier this month at the Wired 2011 conference. From Light Reading's article on the speech:
We can't close our eyes to [the impact of over-the-top services]. ... We have to embrace the future and change our raison d'etre. ... We can't operate in a walled-garden environment, Key said.
That's why the new Digital division has been set up as a separate operation -- so that it can behave and develop like a separate organization and then inform the rest of the group and feed it new ideas, business models and services, even those that cannibalize existing revenue streams. That autonomy is important to being able to deliver against its mission, Key noted.
Telefónica has been using Jajah in several different ways.  It provides wholesale VoIP to other companies and operators (including Microsoft Lync Online), it is a brand name for VoIP long distance for 02 subscribers in Germany and the UK, and it maintains its independent apps, like a mobile Facebook integration app that got a lot of attention earlier this year.

In April, Telefónica as a whole estimated that its voice and messaging revenue would go down by 1 to 3 percent by 2013.  Not really that much.  And I am sure the company is not giving up on voice. 

But look, every operator has to come to peace with VoIP sooner or later.  Telefónica has decided to do it sooner.  And it’s a creative solution. It helps the company stay relevant globally.

This is just one model, among several.   So when does it make sense for an operator to partner with an over-the-top company?  And when does it make sense for them to do it themselves?


  1. Check out this story from Light Reading. Real change of heart from the Telefonica guys.

  2. Telefónica launched a cloud-based telephony service in March which overlaps quite significantly with Jajah. So even they don't seem entirely clear about how OTT services fit into their business model.