the game is up, page-2

voip for mobile phones has arrived Wireless: Internet calling via cellphones
Eric Sylvers International Herald Tribune
TUESDAY, APRIL 4, 2006

MILAN A top European Union official created a stir last week by suggesting that limits should be placed on what mobile phone operators can charge subscribers who use cellular phones outside their home markets. At the same time, the prices carriers charge clients who call abroad from their home countries has gone largely without attention.

That may be about to change with the arrival on mobile phones of voice over Internet protocol, or VOIP, a technology that makes it possible to transmit voice conversations over the Internet. VOIP on mobile phones could radically lower the costs of calling internationally because making calls becomes analogous to sending e- mail, where there is no extra cost beyond what is paid to the Internet service provider.

This could spell economic relief for people who use their cellphones making lots of calls abroad, a service that in some cases can run to $1 a minute or more. The Italian provider 3 Italia, which has six million mobile phone subscribers and is a unit of Hong Kong-based Hutchison Whampoa, introduced a VOIP service in February that for a flat monthly fee of €15, or $18, and a tariff of 5 cents per hour - yes, per hour - allows subscribers to call fixed-line phones in Japan, South Korea, Australia and most of Western Europe, and both fixed and mobile numbers in the United States, China, Canada, Singapore and Hong Kong.

Hutchison's Hong Kong mobile unit introduced a similar fare structure last year, and its British unit probably will do likewise in the coming months, said Andrea Gualtieri, director of marketing for 3 Italia's consumer division. Gualtieri rejected any notion that the new fare is so low that it is not sustainable over the long term.

"This is not a promotional offer; we have every intention of keeping this rate," Gualtieri said.

Since it needs a broadband Internet connection, VOIP works well only on mobile phones that use high-speed third-generation networks, making the technology particularly attractive to 3 Italia, which does not have a second-generation network. But mobile VOIP is also potentially appealing to the bigger mobile phone companies that, in addition to underused 3G networks, have older networks clogged with traffic.

For several years, companies like Skype have been using VOIP to offer free calls between computers, and in the process they have stolen traffic from traditional fixed-line phone companies. In the hands of mobile phone service providers, the same technology raises the stakes. According to a report by the Boston-based consultancy Pyramid Research, $200 billion of fixed-line phone traffic could move to mobile networks in the coming years.

"If mobile operators want to capture some of that revenue, they have to react soon, because otherwise they risk losing ground to fixed-line operators that are also using VOIP to improve their services," said Svetlana Issaeva, manager of communications, media and technology with Pyramid Research, who wrote the report. "So far, we have only seen the smaller, more aggressive mobile phone companies use VOIP, and the big mobile phone operators such as Vodafone and Orange would do well to begin formulating a response to the new situation."

E-Plus, Germany's third-largest mobile phone company, is one of the smaller carriers using VOIP. In October, it began bundling Skype's software with a flat-rate data subscription. For €39.95 per month, the 10 million E- Plus customers can have unlimited access to the Internet and unlimited free calling between phones that have Skype. While the flat fee is not particularly cheap, it is largely in line with what many fixed-line broadband Internet service providers charge.

In February, Hutchison Whampoa, which has telecommunications businesses in Italy, Sweden, Britain, Denmark, Ireland, Hong Kong, Israel and Australia, signed an accord with Skype to sell handsets with Skype's software built in. The debut is likely to be in Sweden by the end of the year.

Niklas Zennstrom, chief executive and co-founder of Skype, which is owned by eBay and has more than 50 million registered users, has promised other deals as it pushes itself, and VOIP, from computers onto mobile phones.

MILAN A top European Union official created a stir last week by suggesting that limits should be placed on what mobile phone operators can charge subscribers who use cellular phones outside their home markets. At the same time, the prices carriers charge clients who call abroad from their home countries has gone largely without attention.

That may be about to change with the arrival on mobile phones of voice over Internet protocol, or VOIP, a technology that makes it possible to transmit voice conversations over the Internet. VOIP on mobile phones could radically lower the costs of calling internationally because making calls becomes analogous to sending e- mail, where there is no extra cost beyond what is paid to the Internet service provider.

This could spell economic relief for people who use their cellphones making lots of calls abroad, a service that in some cases can run to $1 a minute or more. The Italian provider 3 Italia, which has six million mobile phone subscribers and is a unit of Hong Kong-based Hutchison Whampoa, introduced a VOIP service in February that for a flat monthly fee of €15, or $18, and a tariff of 5 cents per hour - yes, per hour - allows subscribers to call fixed-line phones in Japan, South Korea, Australia and most of Western Europe, and both fixed and mobile numbers in the United States, China, Canada, Singapore and Hong Kong.

Hutchison's Hong Kong mobile unit introduced a similar fare structure last year, and its British unit probably will do likewise in the coming months, said Andrea Gualtieri, director of marketing for 3 Italia's consumer division. Gualtieri rejected any notion that the new fare is so low that it is not sustainable over the long term.

"This is not a promotional offer; we have every intention of keeping this rate," Gualtieri said.

Since it needs a broadband Internet connection, VOIP works well only on mobile phones that use high-speed third-generation networks, making the technology particularly attractive to 3 Italia, which does not have a second-generation network. But mobile VOIP is also potentially appealing to the bigger mobile phone companies that, in addition to underused 3G networks, have older networks clogged with traffic.

For several years, companies like Skype have been using VOIP to offer free calls between computers, and in the process they have stolen traffic from traditional fixed-line phone companies. In the hands of mobile phone service providers, the same technology raises the stakes. According to a report by the Boston-based consultancy Pyramid Research, $200 billion of fixed-line phone traffic could move to mobile networks in the coming years.

"If mobile operators want to capture some of that revenue, they have to react soon, because otherwise they risk losing ground to fixed-line operators that are also using VOIP to improve their services," said Svetlana Issaeva, manager of communications, media and technology with Pyramid Research, who wrote the report. "So far, we have only seen the smaller, more aggressive mobile phone companies use VOIP, and the big mobile phone operators such as Vodafone and Orange would do well to begin formulating a response to the new situation."

E-Plus, Germany's third-largest mobile phone company, is one of the smaller carriers using VOIP. In October, it began bundling Skype's software with a flat-rate data subscription. For €39.95 per month, the 10 million E- Plus customers can have unlimited access to the Internet and unlimited free calling between phones that have Skype. While the flat fee is not particularly cheap, it is largely in line with what many fixed-line broadband Internet service providers charge.

In February, Hutchison Whampoa, which has telecommunications businesses in Italy, Sweden, Britain, Denmark, Ireland, Hong Kong, Israel and Australia, signed an accord with Skype to sell handsets with Skype's software built in. The debut is likely to be in Sweden by the end of the year.

Niklas Zennstrom, chief executive and co-founder of Skype, which is owned by eBay and has more than 50 million registered users, has promised other deals as it pushes itself, and VOIP, from computers onto mobile phones.