VoIP momentum is shifting within Europe with Eastern Europe coming in strong now. The new set of initiatives is driven by the Wimax service providers. There are over 40 Wimax service providers in Eastern Europe if you count the Baltic states as well. Nearly half of them have either launched a VoIP offering or are involved in such trials. (There is a partial list at the end of this post).

The present VoIP traction in Eastern Europe is different than what we saw two years back. Two years back it was all about the network upgradation of the incumbent telcos there. This time it is a bit different. The alternative carriers are going for the broadband telephony type option. Wimax operators seem to be the driving force right now.

Continue reading "Wimax operators in Eastern Europe aggressively deploying VoIP" »

If Nimbuzz is planning to play with social networking and all the buzz words, it might be a bit late in the day. The market is looking for a monetization story, not a mobile VoIP app that hooks into every IM-client / social network / handset on earth. What is the value in that? There are plenty in the mobile VoIP market already signing up customers without much revenue to show. The only time they generate revenue is when a call is terminated outside the community cloud i.e. into landlines and mobile phones that are not Nimbuzzed.

An IM or a voice chat between Nimbuzz-to-Nimbuzz is not going to generate money. It will remain a challenge to monetize that aspect – I mean for ever! So something is wrong here: You create a community but make money only when you communicate outside that community!!! What incentive is there is expand that community then?!!!

For off-Nimbuzz calls, the company will make money on international calls mainly. Like EQO and iSkoot, Nimbuzz will also re-direct the calls to its local VoIP PoP from where it transports the call over public Internet backbone. So for the amount of time you are on an international call, you are effectively making and paying for a local call in addition. That is like the early PC-to-Phone days when you had dial-up connections. Outside the US, where local calls were metered, you paid for a local call (to your telco) plus the international call rate charged by Net2phone and others. That was not the main factor responsible for slow uptake of PC-to-Phone, but it was a turn off nonetheless.

Continue reading "Nimbuzz: What is the revenue model?" »

• 1.09 million VoIP subscribers at the end of 1Q08
• Added 125,700 new subs during 1Q08, the most active VoIP quarter so far.
• VoIP revenues nearly doubled to $121 million compared to pro forma revenue of $63 million in the year-ago quarter.
• VoIP represents 11.4% penetration into the overall customer base.

• VoIP subscribers in Norway 133K. Added 2k new subs during 1Q08
• VoIP subscribers in Sweden 209K. Added 7k new subs during 1Q08
• VoIP subscribers in Denmark 107K. Added 8k new subs during 1Q08

• Telecom Italia ended 1Q08 with 136k IPTV subscribers, an increase of 56 thousand in the quarter.
• 1.5 million VoIP subscribers as of end 1Q08, which represents 23% penetration into retail broadband access lines.

• Added over 639k VoIP subscribers during the 1Q08.

• Comcast ended 1Q08 with a total of 5.1 million VoIP subscribers.

• 5.1 million VoIP customer base represents 12% penetration of the total Comcast addressable market

• Revenue from VoIP service more than doubled to $573 million in the 1Q08 compared to the same period of the prior year. Circuit-switched phone revenue declined $69 million to $14 million in the 1Q08.

• As of 1Q08, Comcast had 66,000 circuit-switched customers, and expects to wind down that business by mid-year 2008.

• Telio had 148.9k subscribers at end 1Q08. Total increase of 4,210 during 1Q08.

• Majority of customers (104,854) in Norway.

• Revenues: NOK 94.3 million, same as in 4Q07.

• Average monthly revenue per subscriber NOK 261

• Serving 1,900 VoIP lines to the SMB market.

• Mobile VoIP, new company focus

Jangl investors should try to sell the company assets to a telecom vendor. Some of telecom vendors are developing features that enable ad supported communications apps. Still early days but a Jangl platform would place them ahead of most competitors.

We are going to see two relevant trends going forward. One is the re-positioning of telecom service providers as some sort of media companies enabling various forms of entertainment, content, and social networking through PCs, TVs and mobiles. The other is the re-thinking among Voice 2.0 companies to productize their platforms.

Continue reading "Who should pick up Jangl assets?" »

• 1.7 million VoIP subscribers as of end 1Q08

• Added 93k or 5.8% during 1Q08

• VoIP represents 36% penetration in homes passed

• VoIP represented $160 million revenue during 1Q08 which is approximately 8% of company’s consolidated revenues for the three months ended March 31, 2008

Tata Communications will be deploying the high density gateways from Sonus. This is for the international footrpint, not for the domestic Indian network. The domestic network deployment would be a much bigger opportunity if it materializes for Sonus. Sonus has been involved in trails with Tata as well as Reliance in India.

The international footprint where Sonus gets its foot inside was inherited through the VSNL acquisition. Here comes the history:

- ITXC, one of the largest VoIP ILD wholesalers, deployed multiple platforms including Excel Switching (now part of Dialogic), Huawei, Vocaltec, Cisco, Clarent (now part of Verso gone bankrupt)
- ITXC standardizes around Cisco platform, the famous AS5300
- ITXC gets acquired by Teleglobe. VoIP traffic growth remains flat for a while.
- Teleglobe gets acquired by VSNL. By this time VSNL had already been acquired by Tata I think
- VSNL also used Cisco VoIP gear in its international footprint
- Teleglobe/VSNL Intl did not migrate to high density MGX platform of Cisco
- TODAY: They announced move to Sonus platform

Total revenue $27.9 million, a 20% decline from 4Q07

VoIP product revenue $20.7 million, compared to 4Q07 revenue of $20.9 million

1 customer accounted for 10% of 1Q08 revenues: MTN. Top 10 customers accounted for 52% of Q1 revenues. 6 customers each accounted for $1million or more in Q1 revenue.

4 new switching customers in 1Q08.

Revenue split: 16% North America, 84% International. Compared to 4Q07 split of 23% North America, International 77%.

Service revenue: $5.6 million. Gross margin: 53.6%.

• Added 30,000 net subscriber lines in the 1Q08 and finished the quarter with more than 2.6 million lines in service

• Average monthly customer churn increased to 3.3% in the first quarter 2008 from 3.0% in the fourth quarter 2007.

• Marketing cost of customer acquisition: $216 per customer. Total marketing costs during the quarter: $61 million.

Continue reading "Vonage 1Q08 Update" »

• VoIP subscribers: 3.2 million, representing 12.6% penetration of service-ready homes passed

• Added 280,000 VoIP subscribers during the quarter

• Continued roll out VoIP services to SMEs. As of March 31, 2008, TWC had 10,000 commercial VoIP subscribers.

It remains a mystery why Sonus is not keen on acquiring a feature server company such as Broadsoft or Sylantro. They should have made an acquisition of a Class 5 feature server three years ago when consumer VoIP got going. Netcentrex was another option available at the time.

Sonus has a residential feature set in their access server product but it has not done so well. Sonus has enabled consumer VoIP offerings of AT&T (Callvantage), Qwest, AOL, Carphone Warehouse and others. Only Carphone has scaled up somewhat.

The absence of an alternative vendor in consumer VoIP has meant that most business is ironically going to the legacy vendors. Sylantro and Broadsoft are small players in consumer VoIP. I reckon Sonus with one of these products would have done very well. Sonus placed its bets on over-the-top VoIP rather than other VoIP-to-the-edge options. It turned out to be right but did not translate into any fortune for Sonus.

Continue reading "One acquisition that Sonus badly needs" »

A few open questions on the recent Jajah/Yahoo deal, perhaps our readers can answer:

Whatever happened to the Dialpad acquisition by Yahoo? Was that investment a waste then? Yahoo had acquired the company because apparently they needed an insight into the call routing science.

Jajah does not do PC-to-Phone application. Is Jajah going to develop that capability for Yahoo Messenger, or is it going to be a similar application to Jajah i.e. web initiated telephony that does not necessarily use the public Internet? Jajah voice quality is great right now because the company does not use public Internet.

Continue reading "Questions on Jajah-Yahoo deal" »

• 4.65 million VoBB subscribers in France as of end 1Q08. Added 547k subscribers during 1Q08

• 722k VoBB customers outside France. Poland: 164k VoIP subscribers, other European countries 558k

•VoIP represented 61% of the number of ADSL subscribers and IPTV represented 17%

Continue reading "France Telecom 1Q08 VoIP and IPTV Update" »

It has been a while since I heard any major development on the consumer FMC side. I am assuming that mobile VoIP and Femtocell have pushed this thing back a few years. But there must surely be something in store for enterprise FMC during 2008. There is much more activity around enterprise managed FMC solutions. All major PBX makers have announced their products now.

The early adopters here have been healthcare, education, and warehouse operations. But there is interest coming from new segments such as the banks, we are told. With early implementations in particular there was need to have on-campus mobility as well as remote mobility so segments such as warehouse operations - where WiFi access can be very important - picked up some of the FMC first. Hospitality and healthcare also have that campus aspect where you can put dual mode device on campus on WiFi and same number can work on cellular.

Continue reading "Features that could put FMC on FIRE" »

ThinkPanmure thinks telcos worldwide will set up an old style cartel with shades of 19th century settlement rate system. It is supposed be a joint initiative to offer Skype type services. I am not sure if such an alliance is cooking, but if that is the case, the stuff being cooked is likely to remain half baked. Here is why:

• It will be an intergalactic challenge to bring two dozen telcos under one roof. Previous attempts to set up alliances - Concert, Global One etc – have failed.

• The proportion of IP-IP calls is miniscule. It is in the region of 6% of the overall voice traffic in France, the country with world’s highest VoIP penetration. On a global scale IP-IP calls proportion is less than 1%. What that means is even with a Skype type service you are still paying for terminations, the same old story as in the landline business.

Continue reading "A P2P cartel" »

As has been the underlying characteristic of VoIP industry over the last 7 years, the growth pattern refuses to change direction. Our 9th annual industry update published today reveals a yearly increase of 67% in VoIP access server licenses shipped worldwide, and a 35% increase in VoIP traffic.

There is no evidence yet of a long term slowdown in carrier spending. It seems that despite the risk of recession (especially in the US) carriers have no choice. They have to build out the IP infrastructure if they are to remain relevant.

The new investment cycle that started in 2004 to do with access part of carrier networks continues into 2008 and is likely to remain so through to 2009. That can be said with confidence in case of European countries at least. On a global level, even if the investment slows down due to financial issues, the carriers have to spend nonetheless. They have little choice, it seems. Due to the losses in landlines, wireline operators are expanding into mobile and mobile operators on the other hand are looking to leverage fixed broadband networks for voice offload or over-the-top services. The underlying technology that lets them both achieve those objectives tends to be VoIP.

The report covers various aspects of VoIP industry and is quite comprehensive as the previous annual reports. A lengthy post would not be possible. I have however listed a few bits from the Executive Summary below. A big thank you to those who ordered the report in advance. We appreciate your vote of confidence. There are also two other reports we announced today (Voice 2.0 and Mobile VoIP).

Continue reading "VoIP industry defying investor sentiment" »

72% of Voice 2.0 developers prefer to work with Open Source telephony platforms like Asterisk, OpenSER, and FreeSWITCH and offer services direct to the consumer - according to our survey. Open Source platforms mentioned here are now considered carrier grade. For a standalone Voice 2.0 applications open source telephony platforms meet the developer criteria. Although working directly with telcos like BT (rather than going via vendors like Microsoft or Sylantro) is the second most favoured choice, it seems that Voice 2.0 developers overall prefer to take control of their development by utilizing open source platforms and then going direct to the end user.

Continue reading "Voice 2.0 developers like Open Source and independence, survey reveals" »

Our survey of MVNOs reveals that nearly one-fourth of MVNOs are already offering/trialling mobile VoIP. By 2010 over two-thirds expect to have a mobile VoIP offering in place. The survey is part of our report ‘Mobile VoIP: 2008 Status Report’ published today.

According to the report, MVNOs could drive the first phase of mobile VoIP apart from the independent startups. The eligible providers are MVNOs, MNOs, ISPs, and Wimax operators. As far as Wimax operators are concerned they have to offer VoIP to differentiate themselves from other broadband providers. Mobile Wimax however is not expected till 2009. Wimax operators at present are looking to offer VoIP over laptops and fixed phones through ATAs.

MNOs can potentially use mobile VoIP feature to dump voice traffic transparently on IP. But they have cannibalization issues. ISPs on the other hand would see this as a completely new service since they have not dealt with mobile services before. So for now, MVNOs are expected to show more interest in mobile VoIP. And since MVNOs are likely to drive the first phase along with the independent startups, the take up is unlikely to be huge as per the report.

Continue reading "MVNOs could drive first phase of Mobile VoIP along with the startups" »

I noticed the keyword Azaire Networks being searched on iLocus all through April. So I knew something was going on (or the lack of it). Azaire Networks has indeed and unfortunately been shut down. It happened towards the end of March. Azaire had a nice data continuity story rather than pure voice handover among the FMC solutions in the market. Azaire also had a FMC security gateway product, something similar to Reefpoint (NextPoint) and Netrake (Audiocodes). Acme Packet and other SBC vendors have been trying their luck in the FMC networks. Azaire and others were supposed to have an edge there. Apart from security gateway and multimedia continuity solution, Azaire had about half a dozen trials going on for its VCC solutions. One such trial was at Orange.

Another recent casualty is Verso that collapsed under its own weight. Never easy to make a business out of acquiring 50 different stressed companies. One of the companies that Verso had picked was Clarent, a first generation VoIP vendor of the nineties. Cisco once called Clarent as the biggest competitive threat Cisco faced in service provider VoIP business.

Continue reading "Azaire, Verso, Pulvermedia, IPxstream" »

My writeup on Skype Journal posted day before yesterday ........

Skype’s recent mobile VoIP announcement is an admission that VoIP over 3G is not practical yet. This is evident from the fact that Skype has chosen to implement iSkoot type architecture for its own mobile VoIP offering that it announced last week.

http://skypejournal.com/blog/2008/04/skypes_mobile_dilemma.html

• 435k IPTV subscribers. Net additions during the quarter: 41k. Number of subscribers increased 10% q-o-q

• “1.3% Local revenue decrease and the 4.4% Domestic Long Distance revenue decrease, mainly due to mobile and VoIP substitution”.

• 4.28m broadband subscribers (including ADSL and FTTB) at the end of the 1Q08. 3.6m ADSL subscribers, 634.5 thousand FTTX subscribers, which is up 97.7 thousand in the quarter.

Why have you so far stayed clear of direct-to-consumer B2C offering?

That part of our business has not received much attention yet. But that will change and my guess is that millions – if not tens of millions – will be using our direct-to-consumer service. So there is going to be much more emphasis on viral marketing, search engine optimization etc to drive that. There will be more handset OEM deals.

Like your B2B offering, your B2C offering will also be dependent on MNOs somewhat. Right?

Not so much. Rather than hosting the termination management POPs at the operator NOC, we will host them on our own NOCs. We have NOCs around the world that we use for direct-to-consumer business.

How do you make money from your B2C offering?

The SkypeOut feature is turned on in this B2C offering and that is how we generate revenue, generating SkypeOut minutes.

How many B2C customers do you have?

Right now we have hundreds of thousands using our B2C service.

Going over to your B2B solution, why would a mobile operator want to work with you? Are you not cannibalizing their high margin long distance business?

For Skype-to-Skype calls what the operators have determined is that we are not cannibalising their business. In fact we are adding to their business because if I am on Skype and my friend in Hong Kong is on Skype, I was not going to call that person for two dollars a minute anyway. I would have waited to Skype them over PC and completely cut out the operator. So by putting Skype on mobile phone at least the operator is able to use up the free minutes. With SkypeOut which involves calls to a non-Skype user, you probably had no choice but to call with very expensive ILD rates. So some of the operators prefer not to turn SkypeOut on. At least not at first. They are however realistic about the ILD rates substantially reducing over time with the calling cards and callback and Skype etc. At some point therefore they will also turn on SkypeOut.

Continue reading "Interview with Mark Jacobstein, CEO, iSkoot" »

Added 76k new VoIP subscribers during 1Q08. Total subscribers: 923k

VoIP subscriber base represents 42% penetration into broadband accounts

Netherlands VoIP market: KPN 923k subscribers; Cable 1.14 million subscribers; Others 300k. Total around 2.36 million subscribers

Market growth of VoIP sustained 55-60k per month.

Sonus started displacing Huawei some 6 months back at Convergia. Actually as a first step Convergia stopped investment in Hauwei. They went back to original infrastructure and then selected Sonus to replace the systems.

Convergia had deployed Huawei NGN gear some 3 years back. At the time it was supposed to be biggest Huawei NGN deal outside China: “One of the largest cross country VoIP networks - 17 countries.” See slide 19 of this presentation.

Convergia then took Huawei to court in 2006.

RE Skype’s future, I had put up a post last week suggesting a telco acquisition would be the second best option (the best option being a spinoff) for Skype. A lot of you fine gentlemen do not agree with my suggestion. So let me highlight one more point today.

Skype can potentially save a telco $3 billion. Here is how: The proportion of IP-to-IP calls is increasing. It is directly proportional to the penetration of VoIP in a country. So if France has 25% VoIP penetration, expect 25% of VoIP traffic in France to be IP-to-IP. However even for these on-net calls, telcos use licensed call servers (apart from a few daring telcos who use open source platforms … I will be writing about those telcos next month). All their VoIP calls make use of a call agent to seek routing information and a feature server to enable features such as Caller ID etc. It is a client-server setup. Skype on the other hand is a peer-to-peer set up. There are no core network servers involved.

Continue reading "How Skype can save a telco $3 billion" »

I have not been able to post many blogs lately … totally engrossed in the 9th annual VoIP industry report which I am trying to get published within the next few days. One of the bits I missed on this week was Atreus acquisition by Sonus. I am posting a few notes below:

Is this a good move from Sonus?

Sonus has been working with best of the breed providers for a while. They understand value of a ‘solutions sale’ rather than just the ‘systems sale’. With a solutions sale there is usually quite a bit of money associated in form of professional services. Almost every Atreus deployment requires a significant amount of customization which generates services revenue. There is an increasing focus on services revenue component by large vendors.

Will this acquisition result in new accounts for Sonus? What are the chances of this acquisition getting Sonus inside someone like Telus and KPN?

Continue reading "Notes on the Sonus-Atreus deal" »

Skype is one of those faces that launched a thousand ships! Its big bang acquisition and open developer program led to the formation of numerous VoIP startups. But the company itself got entangled in a loveless relationship that …. as expected …. never proved synergetic. At this juncture when eBay is understood to be exploring different options for Skype, I am going to suggest a couple of places where Skype could find love.

Let me first touch upon the reasons why the eBay-Skype synergy never materialized. eBay acquired Skype in order to woo large retailers into setting up their storefronts on eBay. That did not happen. Even if it had, the kind of click-to-call capability that Skype would have been able to bring in would not have sufficed. The reason for that is the missing third ‘C’. The Context. Click-to-call in a consumer driven environment is what some of you would call a Web 3.0 application. We are not quite there yet. Translation: Suppose a retailer such as Apple set up a storefront on eBay. In order for its customer services agent to better serve the click caller, the agent needs to know the profile of the caller as well as the caller activity on the site prior to the call. That piece of info flashed to the agent screen at the time of the call is Context.

Continue reading "A telco acquisition could make sense for Skype" »

It is quite usual for enterprises to have multiple IP bandwidth links. That increases churn in business IP trunking. Obviously as a service provider, you would try to provide better QoS in order to counter that churn. If however your partner carriers use voice quality solutions from different vendors, I am told that you would have problems implementing QoS end-to-end. Twelve years of VoIP and you still have interop issues!

There are over 65 million fixed line VoIP subscribers worldwide. Nearly all of them – as well as a lot of business VoIP customers - are being served by public Internet. Being able to manage voice quality over public Internet has to be an important issue unless the service providers are content with keeping VoIP as a secondary option. Most of the service providers are burying their heads in the sand hoping the bandwidth in the backbones will remain abundant. That is a bad assumption. Shared transportation will not always work, especially since video is going to consume a lot of capacity.

Continue reading "Interoperability of QoS solutions is a pre-requisite for VoIP services" »

Ad supported telephony as a concept is not proven yet. But it is the new rage nonetheless. I think it is possible to build sustainable business model just because there are lots of talented people out there working hard to prove the concept. I am a strong believer in creating demand for a product where it may not exist.

One of the tools that could help drive ad supported telephony is a speech-to-text engine that converts the audio contents of a phone conversation into text in realtime, scans that text, picks keywords from the conversation, and requests an appropriate Google ad to be streamed over the phone client (let us say over a VoIP client).

Continue reading "Speech-to-Text engine for ad supported telephony" »

Our friends at Infonetics Research put out a press release last week that states that FMC phones made $27 billion in 2007. It is not a typo. So a bit of correction is in order.

I think Infonetics is referring to dual mode GSM/WiFi phones in general. Having a WiFi radio in a GSM phone does not make it a FMC phone. You would require a VCC or a UMA client to turn such a phone into a FMC phone. That is a requirement for a single number service. If you are content with two numbers on the same dual mode WiFi/GSM phone you would still be required to use some sort of a VoIP client for voice usage over WiFi. The two-number service is not really true FMC by the way.

Continue reading "Did FMC phones make $27 billion in 2007?" »