The future of voice does not have to be dark - We'll be back in the fall to keep the discussion going

We’re taking a summer break here at the Voice on Telecom. We’ll be offline for July and August but will return in September. Things are moving so fast in the area we focus on – the future of voice, SMS and person-to-person communications – that we’re already excited to take in what happens this summer and look ahead to the fall and winter.

FreeDigitalPhotos.net

We’ve been writing this blog and been on Twitter since October.  In that time we’ve tried to reach across the whole spectrum, from four posts on gaming to analysis of Telefonica as a leader in innovation to our takes on new business models, the viability of OTT players financially, innovation in Africa, the Chinese New Year and South Korea, among many other subjects.

What’s had the most buzz?  VoLTE, Joyn/RCS and Telefonica’s Tu ME app. It’s fun that all three of those subjects are about looking forward, rather than dwelling on a gloomy financial outlook.

It’s remarkable how much has changed too in our short time online. We’ve seen the launch of Joyn, Rogers One Number and Tu Me as operators go “Telco-OTT”.  And there is a real sense of innovation and urgency among operators, including openness to finding new ways to make money off of voice and texting channels.  On this level, we’ve examined HTML5, WebRTC and in-web and in-game voice solutions.

It’s a broad, kind of vague, but fascinating topic we’re examining together.  So we hope you’ll come back in the fall and continue the discussion with us.

Apple, Microsoft and how operators can tap into the creative potential of WebRTC

Attempting to guess Apple’s next move has practically become an industry in itself – all you need is a patent filing or a loose-lipped Taiwanese factory mole. In fact, a simple firmware reference will do. But even the tech bloggers probably don’t need to rummage through much trash in Cupertino to figure out that Apple – faced by the constant need to keep their consumer communication devices up to date with network trends – is working on a voice strategy for all-IP LTE mobile broadband networks.

A job ad earlier this spring removed any doubt – the company that already brought us FaceTime is looking for telephony software engineers with “experience in SIP, real-time transport protocol and VoIP related protocols," as well as "familiarity with telecommunication network architectures".

And Apple is only part of the story. Microsoft, in turn, has recently been advertising for HTML5-savvy developers to bring Skype to browsers. So what does it all mean?

It’s probably too early to say for sure. But for the rest of us it’s clear that we’re going to be hearing a lot more about real-time communication on the web (WebRTC) in the coming years. Microsoft and Apple are just some of the players – albeit two of the potentially most high-profile – in a still-nascent sector that could have a huge impact on the way we use the internet.

When services such as Skype become part of the browser experience, the possibility of integrating communication with web pages suddenly opens up. I can read my favorite Apple rumor blog on my tablet, see which of my friends are doing the same thing at precisely the same time, and start up a proper voice conversation there and then.

I don’t need to download a native application, and I certainly don’t need to know anything about web development. But do I need an operator?

That depends on the kind of communication I’m looking for. WebRTC has the potential to enrich communication in areas as diverse as social networks, e-health or education. The chances are that at least one of these offerings will be valuable enough for me to pay an operator for it. This gives operators the chance to develop their own applications and – at long last – force their way into the app store revenue party.

On the other hand, perhaps I’ll just be happy to surf the wave of creativity that WebRTC will inevitably unleash, as I glide from one voice-enabled page to another without paying a cent to anybody. And operators shouldn’t expect any favors from the competition, which will probably do everything possible to cut them out of the picture.

So it’s up to the operators to show they mean business. If they get it right, WebRTC can be the basis for a range of offerings that people won’t be able to do without. And it might reduce the chances of either Apple or Microsoft doing an end-run around the whole industry and succeeding with their own communications services ecosystem. How many bloggers see that one coming?

Facebook and the (lack of) mobile imagination

The world is awash in Facebook news, and almost all of it centers on one theme – Facebook’s lack of mobile success. 

Facebook’s rocky IPO?  All the financial worries revolve around the fact that Facebook is not making money from its exploding mobile user base (the Facebook mobile app is ad-free) and was seemingly not prepared for this huge shift to mobile.

Speculation that Facebook might buy independent browser company Opera?  This is largely about leveraging Opera’s huge mobile browser presence, and gets to the same message as our last post on Mozilla’s Boot to Gecko.  From Rethink Wireless:

The new wave of mobile platforms will increasingly rely on slimline operating systems, with most of the work being done in the HTML5 browser, and content streamed rather than downloaded. This opens the opportunity for web players to seize the reins of the mobile experience and weaken Android and iOS - and also puts browser makers on center stage. Firefox developer Mozilla has already unveiled its cloud OS system, Boot2Gecko, and it would be logical for Facebook to follow suit with a browser partner.

Rumors of a third try at a Facebook phone, including hiring away Apple engineers?  Obvious. Facebook does not want to be just an app on an Apple phone. It wants its own platform. This means building a phone, which is going to be very hard for a company with no hardware experience.

The Facebook phone rumors in particular have generated much skepticism and speculation, with news reports suggesting Facebook could or should buy both Nokia and RIM, among others. GigaOm gave the most lucid summary of all this action:

In many ways, the battle to control the mobile experience is a logical extension of the walled-garden building that both Facebook and more recently Google have been engaged in—that is, an attempt to control almost every interaction with users and thereby convince (or force) them to spend more time within the company’s ecosystem, where more data about them can be harvested. That was the rationale behind the launch of Google+, and it has been Facebook’s primary motivation for virtually everything.

There are a couple questions here.  Is Facebook well positioned to be this kind of company?  And can any company – including Apple – accomplish this in a mobile world of 6 billion phones?

The real question here, however, is … why?  Why didn’t Facebook see their mobile revenue problem coming? Why weren’t they better prepared?

Could it be that Mark Zuckerberg, who is all of 28, is too old?

Yes, that seems a silly question (and people are starting to argue that Facebook will do fine), but it also recognizes how disruptive the shift to mobile is, even for “digital” companies that are experts on the internet. Analyst Eric Jackson says Facebook could fade into irrelevance by 2020 exactly because it is a “second generation” internet company as we enter the “third generation” of mobile.

Maybe we need to wait for kids born after 2007, who grew up swiping at smartphones from the beginning, to solve the mobile revenue puzzle.  Kids like this one that we featured in a post on France Telecom and its OTT efforts:

Or maybe it just means that there is still a window for the people who know mobile best – you know, telecom companies – to make their mark and not concede the playing field to Google, Facebook and all the other OTT challengers.

Are latency and quality of service the keys to crowning the next mobile game master?

We’ve touched on the possibilities of developing the mobile and social aspects of gaming through better voice integration. But let’s get down to the details.  The mobile gaming market is now dominated by either simple games like Angry Birds or Doodle Jump, or mobile versions of the old games included for free on PCs, such as FreeCell and Minesweeper. 

Both these categories are incredibly successful, as mobile gaming companies have leveraged the huge installed mobile user base and the emotional attachment players develop to games that occupy their commutes and spare moments. The gaming demographic is also skewing older, with wealthier players who are more willing to pay for content but also with less time to sit in front of their TV playing at home.

But what about the next step, as in making money? How can operators and gaming companies create experiences to attract both serious gamers to the mobile sphere and casual gamers to more involved – and more lucrative – games?

How about quality of service?

Today most teams in popular multiplayer PC-games like World of Warcraft communicate on services like Skype or Ventrilio, running in parallel to their game, while also using text chat within the game. This ad hoc system could run into trouble if used on mobile networks, especially if the network neutrality debate ends in a way that encourages more operators to follow the lead of TeliaSonera and start charging for mobile VoIP use.

Also, just practically, simultaneous texting and playing, on either a tablet or smartphone is a challenge considering the size of the keyboard on either device.

Latency is also a huge issue in games. Just the slightest pause could mean that your avatar gets shot and killed, especially when facing a player from a high-speed broadband connection.

Fixing this is not as hard as it might appear. Only a small portion of gaming data needs to be prioritized to increase the user experience – perhaps voice communication and certain immediate game functions (like bullets flying).

The gaming industry is in flux right now. The distribution system for the dominant consoles like Wii, Xbox and PlayStation has been oddly unaffected by the digital distribution, with millions of games still sold at stores and then taken home to be inserted into the console.

That is changing, just like in music, movies and journalism. And that means there are openings for new players, whether they be EASports alumni, Czech gaming studios, Japanese social networks … or a telecom incumbent.

Device manufacturers and operators need content that separates itself in terms of quality and functionality. But what if their app stores featured real-time on-line games with integrated voice?  Or prioritization through quality of service? What if the players were billed in the game instead of on their phone bill?

Could this help them compete against the likes of Apple (AppStore) and Google (Google Play, formerly Android Market)?

And will they hit the play button in time?

Mozilla bets on HTML5 and Boot to Gecko to take down the giants a second time

Once upon a time, Microsoft owned a 90 percent share in the browser market. Explorer appeared unbeatable, tied to Microsoft’s dominant Windows, and fresh from crushing former market leader Netscape. 

Not today.

What took down the giant?  Well, lots of things, but largely Mozilla with its open-source Firefox browser.

Today the shape of the mobile operating system market looks much the same, if diversified to some degree. You’ve got Apple and Google at the top, with iOS and Android respectively, with Microsoft making a play for relevance.  They’re all huge players backed by other dominant products.

And here comes Mozilla again, this time with its browser-based Boot to Gecko mobile operating system similar in some respects to both Google’s Chrome OS and Palm’s failed webOS . The company announced the system at the Mobile World Congress in February and recently announced that the first Boot to Gecko phone would come out in Brazil in early 2013, in a partnership with Telefonica (yet another bold move by Telefonica – and you can read about that here and here and here).

According to the International Business Times, “Mozilla and Telefonica will jointly launch the Open Web Devices platform and it will be based on web apps and HTML5 offering developers complete access to core device APIs. Capabilities including calling, messaging, browsing and gaming will be developed as HTML5 applications and will be executed via experiences based on the Firefox browser.”

So why might Boot to Gecko thrive?  Here are three possible reasons:

1. HTML5 is the future: We’ve written about the rise of HTML5 before. If the mobile world really does throw off apps for the mobile web, that could disrupt even the Apple juggernaut.

In a keynote at the recent CTIA conference in New Orleans, Mozilla CEO Gary Kovacs predicted a “momentous platform shift” in the mobile world and predicted that there will be 2 billion HTML5-compliant devices by 2016 and that walled app stores will inevitably fall.

"Will one or two companies be able to curate the interests of five to six billion people around the world?" he asked.

2. Mozilla is aiming at the right market:  It is no accident that the first Boot to Gecko phone will come out in a rapidly developing market like Brazil with a forward-thinking Latin American-focused operator like Telefonica. From a Rethink Wireless post:

[Mozilla] sees this as an easier way to deliver a full mobile experience to fairly humbly specified, and low cost, hardware … By relying on streaming and hosted services, the need for expensive local storage and processing is reduced.

If most feature phone owners in the world can’t afford an iPhone, what will they buy?  Maybe Mozilla. And the first Boot to Gecko phones (complete with a catchier new name) will apparently be 10 times cheaper than the iPhone.

3. Things change … even for Apple and Google.

Mobile is simply an immensely disruptive space right now, with mobile operating systems like Symbian, MeeGo and webOS just a few examples of once significant players discarded by a ruthless market.

And, as Steve Costello asked in a post on the GSMA website, might Google get bored with Android?

When Android begins to look as if its time has come, will Google feel the need to shoulder the burden of refreshing the platform from the ground up? Or will it feel that this role now falls to someone else, either evolving the open source Android code or through a shift to a completely fresh platform? 

If the aim of Android is to drive use of mobile internet services by consumers, it is job done. And there are no shortage of platforms that – could – fill the gap created by the departure of Android.

This brings us back to the rise of Firefox. No one thought Microsoft could be beaten. But they could. Same goes for Apple and Google.

And who’s to say that Mozilla (with help from operators like Telefonica) can’t take down a giant twice?

TU Me: Can Telefónica beat OTT players at their own game?

If you can’t beat them, join them. And then beat them. That seems to be what Telefónica is saying with the launch last week of an OTT voice and messaging app and service called TU Me. This cloud-based app allows users to text, call and share their photos and location information using their mobile data allowance. By doing so, it competes directly with OTT services such as Skype, Viber and WhatsApp.

TU Me, available now in an iOS version and soon to be launched for Android, is free of charge. Users need to have the app installed, so for now it cannot be used to make calls to PSTN phone numbers. But the service is available to non-Telefónica subscribers too, so it could easily spread far and wide. By Thursday, TU Me was reported to be the No.1 application in Spain for the Apple App Store, not bad for a beta service only available in English.

So why would an operator, one of the biggest, risk cannibalizing revenues with an OTT service? Such services have been widely blamed for billions in lost revenues for operators. And attempts to charge extra for access to OTT instant messaging apps have not proved popular, as mentioned on Fierce Wireless.

Probably the single greatest justification can be seen in one quote from Telefónica. It would rather “keep the customer than lose them to other products”.

Telecom analyst Dean Bubley, who has long predicted that more operators will shift into the OTT space, writes on his Disruptive Wireless blog that TU Me differs from many of the other OTT offerings out there.  “…apart from Skype and Google Voice, they're not run by companies with 300m+ existing users to whom they can evangelise (sic) and bundle.  Telefónica also ought to have some cost advantages, as it's got its own cloud platforms and back-office capabilities.”

And of course Telefónica was already addressing the OTT threat with its purchase of Jajah, something you can only presume has helped in its development of TU Me.

So how will Telefónica make money from a free service? Additional data revenues, maybe, although TU Me works over Wi-Fi too. Ingrid Lunden at Seeking Alpha says this:

The idea is to get as many people as possible using it, and then monetize it along the lines of how Skype has done - through the rollout of eventual value-added services. That could mean enhanced communications, but Telefónica tells me that it will likely also mean adding mobile advertising and other ways of generating revenue.

We will just have to wait and see how the service will do, how it will affect revenues and numbers for Telefónica and its competitors. At least no one can accuse TU Me of being a case of “me too”. 

Tough times for operators in South Korea

With the highest smartphone penetration of any country in the world, it seems natural to look to South Korea for a glimpse into what the future might hold for operators in other mature markets. And it’s certainly an interesting picture. The question is just how worried it should make the operators.

First and foremost, all those smartphone users – over 20 million in a country of just under 49 million people, according to one recent count – mean truly staggering volumes of data traffic. South Koreans already generate more data traffic per person than anybody else, with volumes increasing almost 20 times last year alone, and are set to reach over 100 gigabytes each – every month – by 2015. To put that in perspective, it’s roughly what today’s US user gets through in a year.

So it’s hardly surprising that LTE is a hot topic in South Korea. Each of the three major local operators has launched an LTE offering, with SK Telecom predicting 10 million users on its LTE network by 2015. But there are already signs that LTE alone won’t be enough – and may even make things worse. KT’s LTE subscribers are using 170 percent more voice services and 112 percent more data than their 3G customers, while SK, having spent USD 2 billion in 2011 on network upgrades, is already talking about rolling out LTE-Advanced by 2013 to keep up with demand. When the best way for KT to show the media their LTE capabilities without signal interference is to hold the briefing on board a ship, as it did last week, you get a sense of just what they and the other operators are up against.

Sounds tough, right? And that’s without the OTT player that boasts 42 million users exchanging 1.3 billion messages every day (in a country of 49 million people, remember). So far the operator response to the runaway success of KakaoTalk has been an ineffectual mixture of denial and overpaying for rushed acquisitions in the same space, as exemplified by SK’s purchase this month of free mobile messenger service Tic Toc (revenues so far – zero) for a reported 20 billion won. KakaoTalk has issues of its own, not least a net loss of 14.2 billion won in 2011, but it’s hard to see how even the ongoing deployment of Rich Communication Services (RCS) based on the GSMA's Joyn initiative can help the country’s operators regain the upper hand.

There is also a political dimension. In the run-up to December’s presidential election the telecom market has been one of the battlegrounds. The in-power Saenuri Party promises to cut mobile voice call rates by 20 percent and force operators to offer unlimited LTE data plans. Estimates suggest this policy could cost operators a combined 1 trillion won in revenues. The opposition, the Democratic United Party, claims it will abolish basic charges while mandating free text messaging and public Wi-Fi, which may leave operators down by 7 trillion won. Little wonder that one telecom insider recently complained that politicians in South Korea “lack any insight about the industry at all.”

What do you think? Is the Korean experience a sign of things to come for operators everywhere as smartphone usage continues to rise, or can the right network strategies, a smarter response to the OTT challenge and different political priorities make a difference?