Thursday, January 27, 2005

A Must Read....SP's Dead Upon Arrival?

This is very big. Could the SP's be dead before they come alive?

From The Calling without cellcos.

With products in the pipeline a handful of companies are moving P2P over IP forward at breakneck speed. The outcome could rock the enterprise, and potentially wreck operators' business models.

With 52 million downloads and counting since its commercial launch in August 2004, Skype has clearly fuelled consumers' passion for free voice calls over the Internet. Estimated to carry 25% of annual VoIP traffic (as counted by TeleGeography), or the equivalent of 4% of total international traffic worldwide, the impact of Skype and other VOIP applications could put a serious dent in mobile operators' revenues.

The scenario for the mobile industry turns from bad to worse when Skype is embedded in a 3G phone or Wi-Fi-enabled device, and falling data prices offer users a much cheaper alternative to cellular voice. Indeed, one eager Taiwanese handset manufacturer recently wrote an open letter to Skype asking for the privilege to be the first to embed the technology in its 3G phones, leading many to believe such handsets will appear this year.

It could also be the ultimate nightmare for the telecoms industry, warns James Enck, a telecom analyst at Daiwa Securities SMBC Europe Ltd. Through his blog and extensive research, Enck has been following the rise of P2P and predicting the fall of telecoms vendors and operators when it catches on.

He argues that the economics of building a sustainable business case solely around voice are becoming increasingly untenable. "Already voice is becoming a weapon in the arsenal of global Internet brands. Whether it's Google or Microsoft, voice is going to become just another feature in applications aimed at some other ultimate objective, perhaps selling some premium services or generating advertising revenues -- in the same way that these same players have commoditized Webmail and storage to a certain extent."

Embed P2P in mobile phones, and the outcome could be profound -- if operators stand still. The technology will no doubt empower enterprise users and road warriors, and deliver them significant savings in roaming and long-distance charges. The choice for operators is to let any remaining revenues go to their competitors, or to adopt the services and apply them to their own networks and users.

There are simple steps operators can take, such as drastically cutting voice charges, particularly for international and roaming calls, where mobile VOIP would make its initial impact. But there's also an opportunity for carriers willing to work with upstart companies like Nimcat -- in addition to simply "locking in" the outside traffic, mobile carriers could further integrate the technology into their own networks, and potentially steal business away from fixed providers by providing enterprise PBX features such as the ability to have common directories or a call attendant.

Mobile operators are control freaks whose worst nightmare is to become dumb pipes for their users' data. They can use some of their usual tricks to resist this, like blocking VOIP traffic on their networks, though this is likely to just drive users to more friendly competitors, even data-only MVNOs (one of which could be launching on a Japanese 3G network soon). But if they offer users the technology as a way to reduce costs and improve services, they've got far more to gain.

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