What is driving mobile telephony arbitrage in form of callback and VoIP?
Skype is not covering mobile VoIP well. There is demand for intelligent and cost-efficient apps on mobile. From user perspective mobile prices are high. So there is an opportunity there. Why should a call from fixed line be nine times cheaper than from mobile?
Xing was the first Web 2.0 company to go public. You were co-founder at Xing. What is common between that experience and your present one at Cellity?
Like Xing, we are developing the market because this is all new. People are not used to things like mobile LCR and mobile callback. Going back to my Xing days, there was no market for social networking. The market was developing while we developed and created it. People were not used to putting up their details online.
Your application is based on Least Cost Routing.
Yes it is based on LCR and no VoIP. That app is available to German consumers only because you need to have a German SIM card. Another offer we have is mobile callback which you can use in any country. We also do SMS via GPRS.
Tell us about your softclients and how many phones they work on.
We did the client in pure Java. So we have a very broad handset base. 95% of new phones that come out support Java. Any phone that supports Java can use our app.
Does mobile call back have a short term potential only?
If you look at the German market, callback and resale started in fixed line market about 9 years ago. Today every second call on fixed line is carried by alternative carriers. So you re-direct the call from the provider you are with, which is what callback is also about. Nobody talks about it because margins are tiny but it is still a big market. It has not disappeared. So we think that mobile callback has a huge potential but we are also working on other value added apps as well. Mobile callback also kills roaming charges. With mobile callback you can redirect the call to any other phone, for example to a hotel phone when you are overseas. So there are no roaming charges.
Will mobile VoIP kill mobile callback?
It is still a long way to go. Look at Truphone. They are having lots of blocking and legal problems. And end user is not used to using WiFi for voice.
What are the overall prospects of mobile telephony arbitrage?
In Germany 9% have no fixed line. In Austria 17% have no fixed line. This trend is increasing. So mobile telephony arbitrage will have a huge market.
What are the pre-requisties for a successful, soft-client led mobile callback or mobile LCR or mobile VoIP?
It has to be easy, as convenient as possible, has to work instantly on the very first call. Very few people try it five times.
So what will be the impact of this mobile arbitrage on MNOs?
The market is so enormously big. In Germany alone, the mobile market is 20 billion Euros. It will take a long long time for companies like us to take a chunk out of that. So although prices are going down it is being over-compensated by minutes. So overall speaking, there is growth. On the other hand mobile callback and mobile VoIP will help quickly establish the mobile phone as communications device. It attracts a price sensitive segment to mobile phones.
What sort of market can companies like you grab?
I don’t think any such company will grab 5% of the market anytime soon.
And therefore, how big is the mobile callback and mobile VoIP market worldwide?
I would guess about 100m to 200m dollars per year. That is LCR plus callback and mobile VoIP. Biggest part in the pie could turn out to be mobile VoIP if you include FMC and single mode Voice-over-WiFi. Second biggest is callback and then LCR.