HTML5 and a world of millions of voice services

Right now, how many companies can develop voice services?  1,000?  Maybe 2,000, if you include every little VoIP startup?

What do you think about millions?  This will be the effect of the HTML5 revolution – every web developer out there will have the ability to embed voice connections in their pages, mobile or otherwise.

This will, obviously, change the context of how we use voice, as we continue on our journey from fixed to mobile to VoIP to integrated communication on web sites.

It will, in effect, expose communication, instead of restricting it.  No longer will we have communication by invitation – with 25 clicks to talk to someone new on Skype.  We will have communication with one click – and Skype on Facebook, which allows users to connect directly to online Facebook friends through Skype, is only the first step in that.

In the context of The Voice on Telecom, we see three primary groups affected by this change:  consumers, developers and operators.

How will HTML5 impact each of them? 

It is the most clear cut for consumers.  On the plus side, they will get free voice, innovative services and real-time engagement, which could mean a healthy increase in direct human engagement and less texting or writing (which will always have their uses, of course).

On the minus side, every service could have a different look and feel, which is confusing; there will be no way for a user to manage reachability; and developers could face a lack of consumer trust in billing if they do manage to build a voice service people will pay for.

This trust issue is the key.  Developers will love having the voice option, but 

they need to build trust with consumers in terms of both billing and reachability. 

Operators ostensibly have the trust of their customers but will have a tough time acting alone in a fast-moving developer world. And standardization of the HTML5 sphere in terms of connection – what the telecom industry is historically good at – would take too much time for such a diffuse, fast-moving world.

But if operators can share their revenue fairly with developers, if they can embrace web services, they will gain a new channel, not just for ads but for all kinds of communication.  Google did not attack the advertising industry, even as it revolutionized it.  Instead, it worked with it.

So operators need to create new ecosytems around voice.  This will be a challenge, but the opportunity is there, and if they don’t take it, someone else will.

Will voice be the “killer app” for tablets too?

The iPhone transformed the smartphone market when it was launched in 2007.  Why?  The graphics?  The swiping?  The integration with iTunes and the like?

Not according to Steve Jobs. This is what he said as he introduced the iPhone to the world:

We want to reinvent the phone. What's the killer app? The killer app is making calls! It's amazing how hard it is to make calls on most phones.

This is still true with smartphones, even if the buzz has shifted to voice recognition and the great debate about how revolutionary the Siri software in the new iPhone is compared to Android voice recognition efforts.

So what about tablets?

Sprint in the US thinks Jobs is still right.  Tablets are going to be all about voice.  From mobilebloom:

Sprint’s Director of Business Product Marketing, Jeff Adelmann, stated that tablets should now include telephony as one of their prime features, suggesting that 4G and 3G models of these devices might not consolidate their position in the market before that happens.

Light Reading expanded on this, with Adelmann explaining that tablets don’t have to act as giant phones but that they must have all the capabilities of a desktop and smartphone to really solidify their market position.

There are mobile tablets out there of course.  And Telstra in Australia is featuring a Cisco tablet with high-profile telephony features.

But what do you think?  Is voice always the killer app?  Or will tablets do just fine with data?

Is Mxit a sign that the future of mobile innovation is in Africa?

Innovation often happens on the edges.  This can mean at the edges of an industry, like telecom, or the edges of a place, like Silicon Valley.

But it can also mean the edge of geography and culture and technological development.  So when we think about innovation in SMS or internet-based communication, maybe we should be looking away from California and London towards places like South Africa, where Mxit has melded messaging, the internet and a social network into a dominant offering.

From a column at Memeburn on Africa turning the tech world “upside down:”

These innovative solutions are based on needs locally, many of them due to budgetary constraints. Some of them due to cultural idiosyncrasies. Often times people from the West can’t imagine (nor create) the solutions needed in emerging markets. They don’t have the context nor is the “mobile first” paradigm understood.

The author, Erik Hersman, goes on to discuss the idea that Africans often have to work with a given technology, such as SMS, longer due to financial constraints.  This leads to innovation when others have moved on to the hot new thing.

Mxit is an over-the-top (OTT) player in that it uses the internet to relay messages from mobile phones to chat rooms, computers and other phones.  It has more members in South Africa than Facebook, boasts 45 million registered users worldwide, and processes 750 million messages a day. But it is popular mostly because it is cheap and flexible, the social media of choice of 30 percent of South African youth.  (For a 2007 analysis about why it works both technically and financially, go to this Telco 2.0 anaylsis.) 

It was also recently sold, and the new CEO, Alan Knott-Craig has a strong vision for the company, again from Memeburn:

“We are a communications platform, that what we are. We need to stop doing everything else and do what we do best and that’s communication,” he says.

“We are not going to make the mistake companies like Facebook have made, by trying to be everything to everyone. We are just going to be a switch with a wallet component that allows people to hook in via an API.”

Mxit just launched a partnership with browser-developer Opera to feature the Opera mini browser to Mxit users and for Opera users to get one-click access to Mxit – a deep integration that many OTT players can only dream of.   

This comes as the company makes a larger push into smartphones, perhaps as its business model – built on low income users on cheap feature phones – is about to play itself out?

Republic Wireless: truly revolutionary or simply a case of disruptive marketing?

Bandwidth.com unveiled a new service called Republic Wireless last week. It launched in beta a few days ago, and it’s got the blogs buzzing with its “hybrid” Wi-Fi/cellular technology and its eye-catching USD 19 a month price point with no contract (after spending USD 200 to buy a special phone).  The company is positioning itself as a revolutionary alternative to traditional telecom.

From a FierceWireless write up:

The service uses a custom-built standard which hands off between Wi-Fi and cellular networks, Dally said. Bandwidth.com is a nationwide, facilities-based CLEC with 24 million numbers issued. "We're deep into VoIP as a company and we're leveraging our expertise to do it," Dally said.

The service will automatically search for a Wi-Fi hotspot to connect to, and that is deliberate Dally said since the company is trying to build a community of people who prefer Wi-Fi. "The cellular component of this is always going to be important," he said. "Today we think for Wi-Fi as an offload. We think the Wi-Fi network is primary."

TechRepublic is excited about it, while others, like TechnoBuffalo, are more skeptical.

There seem to be three main questions.

First, the company needs as much activity as possible on Wi-Fi, not the cellular network.  But can that really be controlled? The company has clearly prepared for this, with limits on cellular use and the threat of kicking people off the service for going over those limits.

Our take? The limits are bad PR, and the company may well have to back down from them. And few players have been able to build cellular networks with anything but cellular networks.  This gets to the historic strength of the telecom industry – standardization, mass market technology and cost-effective radio coverage.

Bandwidth.com is directly and openly challenging this. It will be fascinating to see if they’re right, but we think that while traditional telecom value may be less

relevant in a digital internet-based age, in this case they still matter … a lot. 

Second, how much are you really on free Wi-Fi? Perhaps more than you think, but, aside from home, it seems unlikely too many people will go through the perpetual hassle of either paying for, or even signing in, to a Wi-Fi service.

This gets to the real question.  Who is going to churn to sign up for this? Is this a niche market or a “revolutionary” mass market? 

GigaOm wonders if the Republic Wireless model could take over the market leaving traditional service to only the heaviest users.  But we agree with Andy Abramson at VoIP Watch. This might work for teens and students.  And maybe people with lower incomes.  Maybe. But it will not attract the average user, even a savvy one.

France Telecom goes outside the box and over the top

I wrote last month about Telefónica and its bold moves to stay on top of the emerging internet-based voice reality.  But Telefónica is not alone in this field. 

It’s got good company in France Telecom, which in 2008 set up a R&D division called Orange Vallée to combine “the power of a major group and the flexibility of a start-up” and to directly compete not with telecom players but with internet companies.

Recently, Giles Corbett, the CEO of LifeIsBetterON, a subsidiary of Orange Vallée set up specifically to explore OTT projects, talked to Light Reading about ONVoicefeed, the company’s attempt at redefining voice mail:

He gets straight to the point at about the 2:38 mark, when he says:

I think Orange was at the forefront of this, with this vision that there is a whole new vision to be made out of this, and it may be through partnering and it may even be at times through becoming an over-the-top player itself.

Along slight different, but very relevant lines, France Telecom just announced the creation of a  venture capital fund – with an initial investment of USD 200 million – meant to “finance digital age startups” in France, as well as the rest of Europe.

But perhaps the best way to illustrate this spirit is to watch this viral YouTube video from Orange Vallée CEO, Jean-Louis Costanza, with almost 3 million views and counting.

Is it "freemium or bust" in over-the-top telecom?

With the ambitions of Google, Skype/Microsoft and Apple - combined with the latest HTML5 standardizations – there are strong forces pushing for voice and video to be free. Really, it is no longer a question if voice will be free but "to what extent will it be free."

This poses a host of challenges for operators, of course.  But the same is true for over-the-top (OTT) voice providers themselves. If they are going to make it on their own, how do they survive?  Specifically, how do they make money?  Prepaid plans? Postpaid plans?

The answer seems to be freemium.  This means that the basic service is provided free, while charging a premium for advanced features or better functionality. Freemium has been one of the models of choice in the gaming world and among app developers for a good while now, to the point where some are talking about moving beyond freemium.

Now it is the most common revenue model within the OTT world – including fring, Raketu, voxox, telfree and MO-Call, among others.

Why freemium?  It allows a company to educate consumers and drive them to the paid services, all while they build trust in the service with the free services.

Yet there are drawbacks. One is that paid users subsidize the free users to some degree, which can lead to bad feelings.  But the biggest problem?  A very low conversion rate from free to paid.

A good example of this is Spotify, the streaming music service based on a freemium model (and with a strategy based largely on mobile).  Even as it expands into the US and adds subscribers, it is losing lots of money – USD 41.5 million in 2010, a significant jump from 2009.

But at Billboard, they say that Spotify – and its freemium model – just need time:

But it's too early for rights holders to be frustrated by the inequality of Spotify's revenue … This process will take time. Spotify and other freemium, on-demand services are young companies that are still figuring out the marketplace. 

But how much time? Do OTT voice companies have the time – and money – to let the freemium model develop?

And if not, what other options do they have?

The future? AT&T puts texting before voice

In February, AT&T began offering unlimited mobile to mobile minutes with some of its voice plans.  Then in August, the giant US operator rolled out unlimited texting plans for the vast majority of its customers (who still have the option of paying per text).

In this ad from September, AT&T combined the two:

This flips our traditional way of looking at voice and texting upside down, by putting voice on top of texting.

Is this the new way forward?  Has voice really become less important than texting?

While AT&T used some humor to push this big step, the commercial above hasn't gone over that well with some viewers, who think the wife is too hard on the earnest husband.