Breakthrough innovations happen when two technologies collide. VoIP software is emerging on the mobile phone and is becoming the next big thing in the mobile market.

Like to switch this costly inbound call to VoIP?

Voice over Internet Protocol (VoIP) technology eliminates circuit switching and unnecessary bandwidth on networks, have low infrastructure costs, new advanced features for calling and it eliminates hardware necessary for calling.

The VoIP technology was initially used on desktop computers. When these PC-to-phone applications came out there were no big differences or major problems for mobile carriers. The uprising of Wi-Fi and 3G bundled mobile phones are creating a market that did not exist before.

VoIP offers new functionalities and low cost calling to the customer. Free calling could also create new markets.

Mobile carriers are missing the emerging market

Disruptive Analysis suggested that ‘VoIP-over-3G’ would grow from zero to 250 million users worldwide within five years.” Which company is going to be first mover in a mainstream VoIP solution? The first third-party software solutions for Blackberry OS, Windows Mobile and iPhone mobile phones are becoming available.

Using VoIP on your mobile phone put carriers out of the operating and into data operating business. Carriers who fail to bring a decent and cheap alternative to their expensive mobile platform will lose their competitive edge. They will miss a new market and there are five reasons that they might do so.

1. The management of most leading companies has too much at stake – and is too stubborn to embrace a new core business. It requires a true visionary to make such a radical switch.
2. For Dutch operated KPN telephony, operating mobile telephone calls account for 66% of the turnover. This reliance on income from mobile telephone is similar at many big mobile operators, implying that the global tendency to maintain the operating market is liable.
3. Customers are fine with paying to call, simply because they are not educated yet.
4. The introduction of VoIP might not cover current data plan pricing since the competitively priced income on data plans might not cover license costs and will adjust profit expectations in the future.
5. Shareholders of the carrier operators will insist of focusing on the ‘cash cow’ of the company.
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VoIP is being suppressed by the industry:
• Truephone sued Vodaphone in 2007 for blocking VoIP services.
• Disabling of VoIP telephony by carrier Vodafone
• Google announced that their mobile platform Android would not support any VOIP applications in order to protect the market of the carrier.

The reasons why mobile operators are still neglecting this emerging market are general for many cases of disruptive innovation. There are small margins and customers don’t know much about it. However, considering the expectations of growth, I would recommend the carriers to get onboard the hype and catch the next ‘wave’.

1. Embrace VOIP, offer data plans

Mobile carriers should embrace VoIP solutions to avoid competition on this emerging market. In practice, they have to alter their income streams from operating calls to data plans and create a pool of VoIP solutions for customers. Reason for that is that entrepreneurs would otherwise take over the market in the future. Instead, mobile carriers are suppressing the use of VOIP on mobile phones.

2. Approach competition

Skype, Voipbuster, iCall and WQO are mobile VoIP solutions that have struggles with product legislations, buggy software and a high learning curve, and form a minor threat to the mobile industry today.

However, many stakeholders see the potential and invest in these mobile VoIP projects. Carriers should approach these players and integrate them on their platforms.

3. Create a standard

Carriers could make their VOIP solution an open standard to increase inter-compatibility with other emerging markets. Something that can be learned on the web; your solution can be best, but if a copycat releases the same and considers open standard, you loose your advantage.

4. Educate customers

When first move advantage is created with the product, carriers should go out there and market the advantages to the customer. It is easier to associate your brand name to a new technology as a first mover.

There are 250 million mobile VoIP users expected in the next five years, the ‘mobile VoIP revolution’ is inevitable. Until now, carriers have shown no initiative to be first mover in this market. Instead, they have suppressed the market.

It is a matter of time before an entrepreneur sees the obvious advantage of reduced costs for customers and decides to launch a mainstream VoIP product that will compete with the core business of established mobile carriers. Hutchison Whampo was mentioned in Business week to launch the INQ1 ‘web phone’ for less then $50. Apple’s iPod touch has become a serious threat to the iPhone with simple software.

Carriers should embrace the momentum, and become first mover in VOIP. To remain competitive, cooperate and standardize a VoIP software solution and market the advantages to the end customer.

I hope you like that post!

Tags: disruptive technology, emerging market, landline, POTS, skype, south korea