Ever wonder how those “free” conferencing services work? Why did Magic Jack offer such a low price compared to legacy landline service providers? And why did this only work in the U.S.? Yet, how can Skype and other IP-based communications service providers continue to offer “free”?

Seem like the U.S. had developed subsidy programs, of which the Universal Service Fund (“USF”) was the main culprit. Idealistic politicians wanted to ensure universal access to a variety of constituencies including “High Cost” rural markets such that small service providers could offer conventional phone services at rates comparable to urban rates. So they came up with this Universal Service Fund whereby the “large” carriers would collect an additional fee (or tax) which was then paid out to the hundreds of smaller service providers in “rural” states such as Iowa and Minnesota.

But then some smart people in Iowa caught onto something. The 150+ small carriers in Iowa formed a co-operative that applied for and obtained $80MM of USF monies to set up one of the most powerful fibre networks in the U.S. Of course this meant Iowa had significant extra capacity for terminating calls.

But there was another catch.

The North American numbering system means that a minimum of 10,000 numbers had to be tied up with each “exchange” or central office (the first three digits of the local telephone number). But some of these rural service providers, each of which was assigned an “exchange”, may have had a very low number of actual customers (as low as 150) and certainly many fewer than 10,000. So they ended up with a huge surplus of unused numbers that could, however, be used to collect revenue through access charges and they had the call load capacity due to the fibre installation.

Basically if a caller made long distance calls into these “excess” numbers, the local “rural” service provider could collect, from the larger carriers, termination fees (access charges) which they, in turn, supposedly would collect from the call participants. However, the larger carriers had invoked fixed price, unlimited minutes North American calling plans; this limited their additional customer revenue while driving up their costs. Not a great business scenario.

Once the “local” providers received their funds, they would pay a portion to the conferencing service providers. Effectively it was these access charges that would generate revenues for the “Free” conferencing services. There was one major problem; suddenly larger carriers such as AT&T were getting bills for several million dollars per month; they objected and took their case to the FCC.

And the gravy train has run off the tracks … largely at the behest of the FCC according, in one case, to the Telecom Law Monitor. Two stories corroborate this:

Calliflower, a conferencing service which I have covered often, has eliminated their free calling option. According to a recent post:

There’s an old saying that you have to break an egg to make an omelette.  Today I have some sad news as well,  which is that that we are eliminating our free conference calling offering on March 25th. Eliminating the free offering has been a tough decision, and one that we’ve given a lot of thought. We’re doing it because it is simply impossible for us to continue to offer that service reliably in the face of continued opposition at the FCC in Washington DC from larger, incumbent carriers.

You’re probably asking “what do these carriers have to do with anything?” A lot, it turns out. We were able to offer Calliflower at no charge by sharing a portion of the long distance fee you paid to your carrier in order to access the conference service. Those carriers don’t want to pay anymore. In fact, we haven’t been paid by them in two years. Unfortunately, we can’t operate the service any longer without any ability to recover our costs. That’s the reason we made this very difficult decision.

And this past Monday it came out that Magic Jack is in a position to lose its “Magic” because their parent was providing services not listed in their tariffs filed with the FCC. To quote Andy:

Basically  YMAX, the CLEC, was planning to make money on access charge compensation. AT&T said, we’re not paying the rates you want to charge. Well it seems the FCC agreed. That means that MagicJack’s model of cheap no longer means, almost free or at breakeven to them, and brings to light the fact that they may now see the possibility of losing money on every call without their sister company making a profit on the access charges which subsidized what they have been doing.

Read the posts for more details. But the bottom line is that, if you want to host a conference call, you’ll pay. However, even at the rates charged today – and most are at fixed monthly rates — conference calls are orders of magnitude less expensive than ten to fifteen years ago when the telcos would charge $0.50 to >$1.00 per participant per minute.

Nobody in his right mind is going to start a service today that relies on these “subsidies”. The dilemma for Magic Jack and their parent is that they have effectively offered one year contracts to their customers and must deliver on them or otherwise compensate their customer base. It will be interesting to see how this plays out.

And how can Skype continue to offer free Skype-to-Skype calling? Because at the most basic level Skype calls are peer-to-peer between or amongst participating PC’s (or other Skype-enabled devices) with no intermediary beyond a directory service to establish the initial connection – and no termination charges. The “carrier” is essentially your Internet connections which see voice “packets”, prioritized but on a peer level with the data packets that deliver web pages or your email. But then they add in – at no cost to the user – chat and multi-party voice calling along with other services such as one-to-one video calling and file transfer. And it’s all encrypted. The user’s real costs are your local PC or other terminating device hardware cost and having a broadband or faster Internet connection. Other than for directory servers and, as a result of a recent Skype outage, super node servers, Skype has very little capital costs associated with these services.

Bottom line: even at today’s rates hosted and managed conferencing services are a bargain compared to a decade ago or earlier. But, without the cost drivers, it appears that Skype can continue to offer all its services with the only costs being for connections to the PSTN and multi-party video calling.

So where does Skype gets its revenues? Check out the most read Voice On The Web blog post (even after two years): Skype Business Model Revealed at eBay Analyst Event.

Related articles

• FCC Finds MagicJack Can’t Collect Access Charges From AT&T (blogs.forbes.com)
• Update: MagicJack Responds To FCC Ruling In AT&T Case (blogs.forbes.com)
• MagicJack trips on tariff ruling (calliflower.com)
• NetTALK positions against MagicJack and Skype (skypejournal.com)

Over the past several months I have written three posts about WiFi’s ever-increasing role as a complement to the wireless carriers:

• WiFi: The Real Threat to the Mobile Carriers
• Is WiFi Becoming the Unregulated Stealth Carrier of the Future?
• Traveling in a Bipolar Mobile Mode

Basically, in my recent travels I have found that WiFi access is becoming more readily available at home, in the office and, as I travel, in hotels, airports and restaurants. Especially when in countries where roaming charges can be excessive, I seek out WiFi access points when on my BlackBerry and iPhone to minimize roaming expense for data.

Now that Apple is allowing VoIP over 3G, this strategy will become even more critical when using the Skype and Truphone applications for the  iPhone where the conversation uses VoIP technology over the data channel. While my home network data plan has sufficient monthly capacity for making these calls from within Canada, I’m not sure I want to be paying $1/MB when roaming in, say, the U.S. for a Skype call.

Brough Turner has built up an immense wealth of knowledge about Internet infrastructure and wireless carriers, not only from the technology perspective but also the business implications, including costs. He has recently published a post, WiFi Offload, not Femtocells, where, while postulating that Femtocell technology is too complex and costly become mainstream, he supports his argument by pointing out the business reasons for relying on WiFi as a primary “carrier” for wireless:

• “most mobile data is destined for the open Internet, not for someplace on the mobile operator’s network” Apparently 96% to 99%. Yet, relative to a direct broadband Internet connection, it’s much more costly per user (and more complex) for a wireless carrier to provide the tower and backhaul infrastructure required to connect a mobile phone to the Internet.
• “the primary sources of mobile data demand are laptops, notebooks and smart phones”. It’s become reality that most mobile devices these days support WiFi in addition to 3G/LTE/4G. And the iPad is a “data only” device. Demand for wireless connections will continue to grow rapidly; carriers need to look at the cost of new towers vs encouraging installation of WiFi access points (for which they have zero cost if the subscriber installs the access point).
• “WiFi access points cost less than femtocells” When end users can set up a WiFi access point for around $100 whereas the carriers’ towers can run $1MM to $2MM per tower and require a backhaul Internet link, it is actually to the carrier’s capital cost advantage to support the build out of WiFi access points, whether private (home, office) or public (hotels, restaurants, airports, etc.).
• “WiFi access points are showing up everywhere”. Yep, see the posts referenced above.

Three instances where WiFi has “bailed me out” recently:

• On both my January trips to CES and IT Expo, I had set up voice roaming with Rogers. Just one complication – over 80% of the calls I received, via roaming partner AT&T, had such poor call quality I had to ask the party to hang up and call them back. But when I called them back it was using Skype for iPhone over WiFi connections to have a more than acceptable call quality. AT&T simply failed, big time.
• At one recent hotel the hotel wanted to charge $14.95 per day per PC or smartphone for a WiFi connection. However, the hotel chain involved also had an arrangement with Boingo. Once I got the Boingo availability reminder I simply upgraded my mobile Boingo plan to a combined plan at $17.95 per month, connected my laptop, BlackBerry and iPhone and bypassed the hotel charges. As a bonus, I was also able to use the plan while waiting for my flights at two airports, amongst other Boingo-supported locations.
• During my trips to Spain last fall I ended up in situations where no public carrier access was available but there was WiFi access – once in an office with no 3G signal and once in a hotel in an ancient building with WiFi but no landline phone. Once again in these situations WiFi was the path to get data and Skype for iPhone or Truphone was used for voice calls.

The Bottom Line: Brough says it best in answering his own question “What should an operator do?”:

Mobile operators need to focus on providing bundles of connectivity, not on whether its 3G/4G or Wi-Fi. They should be encouraging Wi-Fi offload by bundling “free” public Wi-Fi access with their mobile data plans.

In the long term, it’s likely most mobile data bytes will go over Wi-Fi.  The 3G/4G network is still necessary to provide a backup path when no Wi-Fi is available. Mobile operators who recognize this can still come out on top, if they focus on facilitating connectivity for their customers regardless of the technology involved.

Note to Rogers: while Andy makes great use of UMA from T-Mobile’s @Home service during his overseas travels, Canadians would appreciate the same level of support for Rogers’ UMA-based services, which are currently limited to access from WiFi hotspots within Canada.

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• Boingo Wireless to Operate Wi-Fi Networks at Six U.K. Airports (eon.businesswire.com)
• Consumers, Not Businesses, Giving Wi-Fi Hotspots a Boost (gigaom.com)
• Boingo Hits the BlackBerry (jkontherun.com)
• iotum’s Calliflower Conference Call Service Adds Skype Access (voiceontheweb.biz)
• VoIP Over 3G Comes to the iPhone – And Maybe Even the iPad (readwriteweb.com)
• IPhone Skype over 3G: ‘Real Soon Now’ (wired.com)

The past six months, with three trips to Europe, have given me the opportunity not only to experience roaming on European 3G wireless services but also the strategies and alternatives that allow me to minimize roaming charges while traveling with both a BlackBerry and iPhone. A key to the achieving this goal lies in the support available for WiFi access points in hotels, restaurants, airports and at conferences that provide robust, scalable WiFi support. But the question outstanding is why would I use both devices? The answer lies in the applications and content.

While one can theorize academically about various low cost scenarios and one attempts to use WiFi wherever feasible, in actual travel, you need access to some form of wireless service wherever you may be. For instance, if lost in a city where you don’t speak the language, Google Maps can often help get you sorted out quickly. Or find the nearest restaurant district (was a big help in Paris, for instance). But you need wireless carrier access to use these services.

So what measures can I recommend?

First step: buy an International roaming package from the home wireless carrier. Over the summer Rogers introduced European roaming packages; here’s the comparison:

The good news about these packages is that the per MB and per minute charges remain the same for any overage over the minimum expenditures. The bad news is that roaming charges are still “huge” compared to the $0.03/MB or approximately $0.10 per minute paid when on my home Rogers network. U.S.-based users should check with their “home” carriers to see if similar plans are available. Rule of thumb and current reality, however: roaming charges remain the last ultra-high margin service for wireless carriers.

So, while relatively expensive, these packages are helpful when away from a WiFi access point; however, as mentioned above, the real saving comes when you set up for using WiFi wherever possible. (In addition I encountered a couple of situations where 3G coverage was weak or non-existent; in these cases access to WiFi became essential.)

Second step: ensure you have installed both Skype and Truphone on your iPhone; you can then make voice calls from WiFi access points at prevailing Skype or Truphone rates. For instance, Skype-to-Skype calls are free while SkypeOut calls are based on using either a Skype Calling Plan subscription or Skype credits.

Third step: buy, at a minimum, a Boingo Global Mobile plan; while WiFi in hotels and restaurants is usually free or has a daily charge, Boingo Global Mobile provides access in over 70 countries at airports and often at hotels where, otherwise, you would pay a daily fee that is usually more than Boingo Global Mobile’s monthly charge.

Fourth step: put the iPhone in Airplane mode but with WiFi access turned on. In this way, no voice calls are received via a wireless carrier; also the iPhone specifically requires proactive user permission to roam on data – leave this turned off. But the iPhone applications, including Skype and Truphone, can all be used when attached to a WiFi access point. (Note: I do not give out my iPhone voice number but do use it for various tests; Google Voice is not yet available in Canada to provide multi-smartphone calling.)

So here is where I use each device:

BlackBerry Bold 9000: email (both BlackBerry email and GMail), BlackBerry Messenger 5.0, Google Maps, SocialScope – still the most comprehensive Twitter application on a smartphone; SlingPlayer Mobile for BlackBerry. Keep in mind that BlackBerry is overall more efficient for handling data due to the data compression provided by the BlackBerry Network Operations Centre architecture for managing data traffic. This ongoing wireless data compression feature is a major reason why I prefer BlackBerry for services such as Google Maps or downloading/uploading pictures in SocialScope as opposed to the iPhone when on a 3G wireless carrier network.

iPhone: main application is Skype, followed by Truphone. Very handy for making calls back to North America from hotel rooms or lobbies, restaurants as well as offices and conferences supported with WiFi access. (But you must have the relevant application open to receive calls and receive/send chat messages.) Other preferred applications include the Safari web browser (faster and more versatile than BlackBerry’s) and Facebook (which has a richer user experience than on BlackBerry) and a few applications that are unique to iPhone. Also comes in handy if the BlackBerry battery has died and I need immediate access to, say, GMail or a browser.

Bottom line: the feature that continues to dominate my preference for BlackBerry over iPhone is the keyboard; it’s a real time two-way communications device whereas the iPhone, with its superior browser capability, continues to be an information delivery device but works best for one way communication. My use of its touch screen keyboard tends to be limited to entering user names and passwords.

A few comments:

• There’s one major application missing on the BlackBerry – with its full multi-tasking capability the BlackBerry is ideally suited for Skype as a VoIP client. One can have real time chat sessions continue in background while using other applications; we experienced this with iSkoot but at this point one would expect to have seen the Skype for BlackBerry that was announced by Skype around the time of last spring’s launch of Skype for iPhone. And now that Skype for Symbian beta supports both 3G and WiFi and the FCC is supporting for “net neutrality”, the “carrier-support” argument for avoiding VoIP clients over WiFi on the BlackBerry no longer holds water. In fact, Rogers has made it clear that they have no issue with running Skype over 3G networks. Let’s hope that Skype and RIM can get the act together such that we can see a product introduction early in 2010.
• On my most recent trip I only bought the 15 minute voice package; with BlackBerry Messenger and SocialScope (for Twitter) available I found little need to make voice calls while in 3G only mode. Skype on my PC at hotel rooms and conferences as well as Skype and Truphone over iPhone addressed 95% of my voice calling needs. (Now, if I could just learn how to order a taxi in Spanish!)
• I realize most smartphone users will only have one phone. I present this post simply to provide an overview of my experience using both these devices while optimizing my roaming experience when traveling out of the home country. I need to have both devices due to not only their popularity but also the different content exchanged and user experiences for each smartphone.

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• You: SocialScope Makes Tweeting Easy on the BlackBerry (gigaom.com)
• Consumers, Not Businesses, Giving Wi-Fi Hotspots a Boost (gigaom.com)
• Another Reason Why I Wish All My Friends Had iPhones: Blipr (techcrunch.com)
• Skype: the “Unofficial” Personal Communications Software for the 2010 Winter Olympics? (voiceontheweb.biz)
• Compact Audio: Yamaha USB Microphone Speaker Opens New Experiences for Road Warriors and Personal Offices (voiceontheweb.biz)

Truphone‘s announcements last week overcame a significant carrier resistance barrier to using VoIP-enabled services to reduce international calling costs. The key secret here was that it required the combination of Truphone’s iPhone and iPod Touch applications along with the Apple Application program that leverages Apple’s established carrier relationships to break this barrier.On Friday I was finally able to complete provisioning of Truphone on my iPhone. It happened at this time for three reasons:

• The association of my original Truphone number and account with a Nokia N95 handset and the “416″ number I eventually transferred to my iPhone whose acquisition as an upgrade on my carrier account minimize my iPhone costs over the term of the three year contract.
• The original iPhone application only supported outbound calling; I would have lost the Truphone inbound calling feature I had on the N95.
• For this reason I left Truphone on my N95 (using a deactivated SIM and my home office WiFi access point) pending the arrival of a Truphone for iPhone application and service that supported both inbound and outbound calling.

Recall also that the original Truphone for iPhone only allowed calls over WiFi access points with no ability to pass them through the underlying 3G wireless carrier. Truphone’s two announcements last week addressed three issues:

• Truphone for iPhone now supports both inbound and outbound calling
• Truphone added the Truphone Anywhere service such that Truphone for iPhone calls could be made over the underlying 3G carrier as well as over WiFi.
• Truphone for iPod Touch (2nd generation) invoked the Truphone Anywhere service allowing calls to be made from iPod Touch to any PSTN number.

Over the course of the past week it has become possible to make low cost international calls from any iPhone or iPod Touch mobile device worldwide. Truphone has demonstrated how the underlying service provider can can eliminate the need to have a multitude of individual “carrier-service provider agreements” with the 79 carriers currently offering the iPhone worldwide. Yet carriers still benefit through increased local minutes used to provide the connection to/from Truphone calls. To quote from Ted Wallingford’s “Heartburn Chuckle: The telecom industry can blame itself”:

The Carriers

The carriers are firms like AT&T, Windstream, Verizon, BT, and so on. Their obsession with the billing unit (the almighty minute) has made them helpless to see the possibilities of a software-rich, application-based global ecosystem. Consequently, the most successful apps to arrive on the carriers’ networks, the ones most embraced by the public, overwhelmingly have one purpose: to steal billable minutes from the carriers. The innovation disappeared and the scrappy new players in the market, the ones with the power to transform the public’s thinking about telecom, instead got stuck doing the same old thing the big telecoms do to put bread on the table: bill minutes. [Author's italics]

For instance, Canadians can now use Truphone for iPhone as their international calling service over Rogers without the need to subscribe to one of Rogers international calling plans but perhaps with an increase in their monthly “local” voice plan minutes. In this case, there is no cost for the actual application and you establish international call credits through a Truphone account. When Rogers’ iPhone customers travel to Europe, calling back to North America can be handled at a much lower cost through hotel, cafe and airport WiFi services, such as Boingo or iPass. (True roaming calls from outside the “home country” over a 3G carrier will still be expensive; Andy’s post linked here suggests RebelSIM provides a solution.)

It was the second part of this announcement that is most significant. Previously VoIP-enabled services, such as 3′s Skypephone, required working with individual carriers to establish the appropriate business and operating agreements. However, in one move, Truphone was able to leverage Apple’s relationships with 79 carriers worldwide to bring about commitment free international calling. Apple, through its Application Program has become a disintermediator, facilitating a business model disruption, once again.

As for the iPhone for iPod Touch application; this is why the most successful carriers need to offer both wireless and broadband Internet services. Calls via WiFi access points, including one’s broadband Internet service, go over the broadband connection and reduce carriers’ needs to build out the capital-intensive wireless network infrastructure, including backhaul.

In a future post, once I’ve had some more Truphone for iPhone experience, I’ll do a comparison of services available over Skype and over Truphone. But one obvious difference: Truphone is about voice conversations only; Skype is about voice and text conversations.

Related Post: Race to Provide Low Cost International Calling Heats Up

Tags: Truphone, iPhone, carriers, voip, Skypephone, iSkoot, international calling, service providers, WiFi

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Yesterday I wrote a post for GigaOm, Skype: Coming to a Cell Phone Near You, discussing how the announcement of two new beta versions of Skype on mobile devices gave a hint of Skype’s future mobile strategy.

At the same time Truphone announced a new version of their iPhone application. Whereas the version released at the time of the Apple App Store launch back in July only supported outbound calling over WiFi access points, the new release not only supports inbound calling to your iPhone number but also makes outbound calls via the 3G carrier networks that offer the iPhone.

Innovation driven competition in delivering low cost international calling services appears to be heating up during these challenging economic times – at least for calls originating in your “home” calling country or area code(s). Here’s a brief summary of what is evolving:

We’ve seen the evolution of two architectures for making VoIP-enabled calling from mobile devices; it’s all a matter of where the calling party’s Skype (or VoIP client) session is opened up – directly on the device or on a dedicated hosted server. This leads to two other considerations:

• Carrying the voice portion of the call from the mobile device into the network cloud: either via the carrier’s robust and proven (GSM) voice channel or over via a WiFi access point
• The need to support Skype’s instant messaging (chat and presence); this always occurs as a data activity

VoIP Client on the Mobile Device; VoIP over WiFi

Skype for Windows Mobile places the VoIP client directly onto the device. As a result the device must handle the “VoIP processing” to generate the packets that are transmitted over the supporting data network (either a carrier’s 3G network or via a WiFi access point.) As mentioned previously, it places heavy demands on the device’s resources, especially the processor (running at much lower speeds than on a PC) and the battery.

Truphone’s original voice offering also runs on the device (usually a Nokia Smartphone). While both Skype for Windows Mobile and Truphone can run over either WiFi access points or a 3G network, it is strongly advised to use these only over WiFi access points to have a reliable, robust, high quality voice service. For instance, the Skype for Windows Mobile download page says:

• Log into Skype from any WiFi zone to make free calls and send instant messages to anyone else on Skype, anywhere in the world, any day of the week.
• WiFi connection or 3G/2G data connection (we cannot guarantee voice quality over 3G/2G. You may also be liable to additional data charges so please check with your operator before using)

Truphone’s original iPhone outbound calling offering was also only available using the iPhone’s WiFi capability; however, details of their architecture were never revealed.

Accessing VoIP via a Wireless Carrier

Over the past year we have seen the rise of several services that use the alternate architecture where a call is placed via a local access point to a hosted server that then opens up a Skype client. The server-based Skype client then completes the call as a Skype-to-Skype call.

While originally pioneered by iSkoot, a service using this architecture, such as Skype Lite beta, makes a call to a SIP Gateway server via a local point of presence while data about the call is concurrently sent via the underlying data network to a hosted Mobile Gateway. This dedicated gateway then sets up a Skype-to-Skype call between the SIP Gateway — now connected to your cell phone — and the destination Skype contact. Skype chat messages can also be exchanged concurrently over the data network. We are now seeing various offerings using this architecture:

• The highly successful Skypephone offered by 3 in nine countries.
• iSkoot providing service for a wide range of phones including BlackBerry, Nokia and T-Mobile’s G-1.
• Truphone Anywhere: when Truphone found they could not offer a highly reliable service over 3G networks (largely due to device resource considerations), they launched Truphone Anywhere that allows Truphone calls to be made over a 2G (GSM/EDGE) or 3G (UMTS/HSPA) voice/data network as well as over WiFi access points.
• Skype for Mobile beta – Skype’s first attempt to go beyond Skype for Windows Mobile onto other platforms such as Nokia N-Series and E-Series devices. This never got out of the beta phase; while you could use Skype chat anywhere, the voice service was only to be available in a limited number of  countries (that did not overlap with countries where Skypephone was available).
• Skype Lite beta: building on the Skype for Mobile beta experience to a service that supports not only smartphones but also over 90 cell phones that support a Java client and include basic web browsing and data capability. According to the Skype Lite page it appears that Skype is working with carriers in ten countries to support this service.
• Truphone for iPhone 1.12 release: makes Truphone calls either over WiFi or any cellular network using an iPhone, building on their Truphone Anywhere experience.

Key features of these server-hosted VoIP client services:

• They are most cost effective when calling from your home country or local calling area. You could incur long distance or, when outside your home country, roaming charges that would run up quite quickly.
• An unlimited or high cap data plan minimizes costs associated with using these services.
• Only Skype provides a full Instant Messaging capability covering both chat and presence. Some Truphone offerings have shown support for SMS messaging.
• Calls to Skype contacts are free.
• Calls to mobile numbers outside U.S. and Canada will still invoke the charges incurred in “caller pays” mobile services.

Why only the cost of a local call? Your cell phone makes a call to a local number which puts the call through to the service’s SIP Gateway. At this point you connect into a Skype-to-Skype call for which there are no termination charges involved as a result of Skype’s unique (and secure) peer-to-peer architecture.  The same applies to Truphone where Truphone-to-Truphone calls are free.

This Skype Lite beta announcement portends that we could be seeing Skype-to-Skype calling, along the lines of 3′s popular Skypephone service in nine countries, become available to mobile customers having a much broader range of cell phones and in up to ten additional countries.

One other service that can be accessed from any phone is Mobivox. However, there you have to build up and manage your address book online such that VoxGirl can help you make your calls; it does not access your mobile phone address book. It’s purely a voice service with no messaging component (other than using SMS to facilitate setting up calls under certain circumstances).

While we’re getting a first step in driving down mobile costs for international calling, the next step needs to be finding a user-friendly way to drive out roaming costs. MaxRoam and Truphone’s SIM4Travel are starting to offer some hope on this front; however, at the moment their costs for USA-Canada calls are much more than my Rogers roaming charge. The winners will feature not only lower costs but a very friendly user interface, interacting with the device address book, that also provides the most complete ranges of services in terms of coverage and complementary conversation modes, such as IM.

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• Truphone for iPod Touch: Accessing Skype Contacts and Social Media

TMCNet Editor Michael Dinan has reported on Jonathan Christensen’s keynote two weeks ago at TMCNet’s IT Expo in Los Angeles. While many of us in the Skype world have heard pieces of this story previously, Jonathan was addressing an audience of enterprise and business telephony professionals who are dealing with VoIP implementation issues.. Jonathan’s basic thesis was that VoIP has become a commodity feature but the innovation starts by going beyond low cost voice conversations:

Now, Christensen said, are emerging three pillars of a generation “beyond VoIP.”

The first pillar, he said, includes different facets, including the fact that – unlike analog telephone conversations – services such as Skype are marked by an “explicit handshake model,” or agreed relationship, where both or all parties have agreed to communicate (a nice idea although this presidential election year will feature no robocalls, courtesy of Congress). Secondly, he said, there’s a new band of audio, including wideband audio, improving communications, in part, by allowing participants to distinguish among different speakers. Finally, higher resolution video makes video conferencing such as that offered by Skype, more real.

Three pillars that set the bar for fully equipped IP-based conversation services from the performance aspect.

Yesterday analyst Jon Arnold, who also attended the conference, wrote in his weekly Service Provider Views column: Is VoIP Dead?

Skype has an important message to deliver, not just for the consumer market, but for the business world too. It’s really a matter of how far ahead you’re prepared to look. While most service providers are just catching up to the realities and potential of VoIP, pioneers like Skype are way past that, and for them, VoIP is so old, it’s dead for them.

He goes on to point out:

The vision Jonathan paints, of course, is based in the world of IP, not TDM. VoIP can readily replicate the PSTN feature set today, but not much more. With end-to-end IP, not only can VoIP deliver an added layer of new services, and integrate seamlessly with Web services, but it can also deliver superior voice quality to what we’re experiencing today. Under these conditions, VoIP is actually a better product than TDM, and that’s where things get interesting. VoIP is still widely perceived as an inferior service, which explains why it is primarily sold on the basis of price rather than quality. Think of the possibilities for service providers when VoIP could actually be marketed as a premium service, and one that does not have to be sold as a way to lower your long-distance costs.

Well, by the time the incumbent telcos come around, Skype will be long past them. Skype has built up a sprawling international customer base that has embraced a communications platform that goes well beyond VoIP. PC-based VoIP and IM have been the backbone of their success, but Jonathan sees a richer experience emerging, and one that is much more than everyday VoIP. In the keynote, he talked about three pillars that will support this new mode of communications – presence, wideband audio and high resolution video.

And, after discussing the three pillars mentioned above, concludes:

Taking all of this into account, one of Christensen’s key messages was that innovation is happening today at the network edge, not the core. Furthermore, it is not coming from the telcos, but from the disrupters from outside the voice world, such as Skype, Google and the whole Open Source movement. Telecom, as we know it, is now software, and rapidly moving into the cloud and the world of Web 2.0. In this environment, voice becomes another data application, and telcos will no longer be able to build their business around it. This means walled gardens cannot last – and this includes Skype, by the way – and the end user will ultimately define what the optimal experience is, as well as where they choose to get it from.

This is the world Skype is building its future around, and to the extent that VoIP is offered as a standalone service, it will not have much of a future here. Service providers are certainly welcome to try doing so, but in my books, the voice of tomorrow will look a lot more like what Skype is talking about today. What does it look like to you?

It’s not about VoIP; it’s about the potential of multi-modal IP-based conversations. Read Michael’s and Jon’s complete posts for more insight.

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Dan York, Director of Emerging Communication Technology at Voxeo, but also on the Board of the Voice over IP Security Alliance (VOIPSA) has written two excellent pieces in another of his blogs, Voice of VoIPSA, discussing the blocking of VoIP calls by Aircell. The first explains how they can block Skype calls, even though they are encrypted while the second goes on to explain why Andy Abramson could make a VoIP call using Phweet.

1. How Aircell is (probably) blocking VoIP phone calls on planes (hint… VoIP Whack-A-Mole)

There it is… all in UDP… and coming in at about 100 packets per second. And if I look at the actual Wireshark traces, I can see that these 100 packets per second are all very tiny sizes. Many of them are between 37 and 50 bytes.

And this is an encrypted Skype call!

No need to decrypt it. Just see that it’s a steady stream of 100 very small packets per second (50 packets per second each way) all over UDP.

Kill the stream. Block it. Conversation dead. No more VoIP on the plane.

It’s basically the network security version of Whack-A-Mole. See a VoIP stream start up… block it. See another one… block it. See yet another… block it. Whenever anything pops up that meets the profile, stomp on it.

This explains, too, why people could talk for a few seconds and then had their conversations terminated. The pattern has to appear in the network monitoring software. The software has to be sure it’s a VoIP stream and not something else… and then the software can block it.

Now I don’t know for a fact that this is how Aircell is blocking VoIP, but it would be easy enough to do it this way.

2. The reason why (probably) you can use Phweet on a plane when Skype is blocked

And there you go… one very possible reason why Phweet may work and Skype, Sightspeed and others were blocked is simply this:

The Tringme Flash-based softphone is sending audio over TCP and Aircell is not recognizing and blocking VoIP calls over TCP.

Or at least Aircell wasn’t blocking TCP. (They probably are by now or will be soon.)

Now to be fair, if Aircell isn’t blocking TCP, this was probably a decent assumption to make. I mean, the typical mindset to date has been… who in their right mind would send audio streams over TCP?

In all the VoIP systems I’ve worked with, I can’t think offhand of any other systems that send audio over TCP. As part of its range of tricks to get through firewalls, I understand that Skype can use TCP if it is unable to send over UDP, but I’ve never captured it doing so. The IP-PBXs I’m familiar with, both commercial and open source, all send RTP over UDP.

Read the entire posts for the details of Dan’s assumptions and explanations. One of Dan’s writing strengths is his ability to make technology understandable to the lay person.

As for not wanting to have voice calls available in flight I would soften my stand if human nature would change. Over the weekend I was reading a book on the history of one of our rural independent telephone companies where they were providing anecdotes about early usage of the operator-serviced telephones:

Mrs. Alice Cooley’s brother, Billy Huang, Tiverton, used the phone for the first time to call his chum a few houses down the street. Alice and some others were out in the garden and they heard Billy shouting loudly on the phone. He thought he had to shout to be heard. Some people never did get over the idea that they had to shout on the phone.

From “Bruce Municipal Telephone System – A Long Line of History 1910 – 1994″ by Anne Duke Judd.

Enough said. Thanks, Dan for taking time to put up these explanations.

Tags: Dan York, Aircell, Skype, GoGo, Andy Abramson, TringMe, Phweet

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I’m constantly amazed at how some mobile phone users insist on having their cell phone conversation take priority over social niceties such as paying attention to the cashier at a store checkout, yakking out loud in an airport (or doctor’s) waiting room, or worse still, due to the implicit safety issue, holding the phone on the shoulder while trying to drive with your head sideways. Dan York got to listen to one side of a few conversations during his train trip home from New York yesterday. Basically I consider these people to be inconsiderate and rude.

I also find that over 85% of my Skype activity involves chat; it’s unobtrusive, relatively private with respect to people around you and provides a simple, effective and much less annoying means of communicating with remote work colleagues and friends.

So it’s no surprise that AirCell, who is installing Internet access on several U.S. airlines’ aircraft, is allowing passengers to chat but not talk during flight. I have to go along with their excuse for not allowing voice: “the consideration for passengers who want peace and quiet”. My hope is that we never see in-flight (cellular or VoIP) phone use allowed.

However, Andy reports on an experience where Phweet may provide a path for voice conversations using a Flash player. American Airlines passenger and Laptop Magazine reporter Joanna Stern, with whom Andy completed the “in-flight” Phweet call, also comments in her very detailed log of her AirCell in-flight Internet experience:

I couldn’t agree more. I was getting stares right and left in the 5 minutes I was talking to Andy and I don’t blame the passengers of American Airlines at all. Granted I was talking really loudly without a headset, but loud talkers on a plane (and in general) are annoying. The poor girl next to me was trying to sleep. Other than the call, I haven’t bothered her once. Though, she thinks I am a total geek.

On the other hand she was chatting with Aircell CEO Jack Blumenstein via Skype throughout the flight.

As for the the restriction on VoIP he says, “Fundamentally it is a reaction to widespread passenger aversion to the idea of many people talking loudly on flights (as we’ve all often experienced before take-off or while landing).”

So will AirCell figure out a way to avoid VoIP over Flash without cutting off all otherwise acceptable Flash traffic?

(And, as for those “Skyphones” that we used to see on aircraft – at some exorbitant cost of several dollars per minute – they got little use and calls were quite short. In the year I flew over 150,000 kilometers on Air Canada I used them once due to a rerouted landing caused by last minute weather conditions at the destination airport.)

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When I received this Twitter message earlier this afternoon:

clicked on the embedded URL and immediately was listening in on a conversation involving not only Stuart Henshall but also David Beckemeyer of Televolution (producer of PhoneGnome – now known as the PhweetGeek), I found I was in for a most interesting conversation experience. Within minutes we had a multi-party call involving as many as eight participants from India, Italy, Ireland (actually, Pat was calling in while on vacation in Spain) as well as others in the U.S. They had all joined “spontaneously” from a Twitter message (in my case initially seen via Twitter4Skype) as Stuart and David launched an Alpha version of Phweet this afternoon.

First thoughts and comments:

• The immediacy – send the URL via Twitter and any of your Twitter Followers can join with three clicks – the URL, the TringMe VoIP Flash Player widget and the “Allow” button within the Flash Player. At that point the call host needs to “accept” your request to join and you’re into the conversation.
• You monitor the call participants and participate in a chat session via a web page with a URL dedicated to the specific call (www.phweet.com/[four character call code]). When the host ends the session, the URL dies also; however, tweets are the only traces left of the call.

• It’s a mashup of Twitter, TringMe, and SIP-based services all hosted on a Televolution server.
• While, if you just send out a general Tweet all your Followers can join; you can Direct Message an individual, or individuals, if you want a totally private call.
• You can join from a browser or a SIP ID; for instance Pat Phelan (of MaxRoam fame) called in from a Nokia N95 via his Truphone SIP ID (Truphone number@truphone.com) but you can also join in from Gizmo 5 and other SIP-based services.
• It’s Alpha: TringMe would periodically drop the call connection but a web page refresh would bring back the Widget button and you could instantly be in the conversation again.
• It’s Alpha: when I attempted to host my own call with Stuart as the invitee, we could “see” each other on the related web page but the audio connection did not work.
• Joining a conversation actually involves a call out from the Televolution server; as a result they are only working with connections that do not involve termination charges. Eventually they would like to have a way to join from, say, a mobile phone while letting another party worry about the back office transactions.
• Call quality was quite good; David needs to up his mic volume but other parties were very clear. On the other hand there is no echo cancellation capability, so headsets are a requirement unless you have echo cancellation hardware embedded into your mic.
• This is totally an Internet based service: effectively your Twitter followers are the directory; there is no other form of intermediation, such as a softphone client, involved in setting up, and participating in, the call. It does require you have the Adobe Flash Player installed.
• It’s Alpha: Stuart and David are still going through the discipline of defining a basic feature set.

Stuart and David are inviting Twitter members to give it a try; they want user feedback before even calling it Beta, to ensure it at least has all the basics of a service that provides reliable connections, total host control (for instance, they need to add the ability for a host to remove a participant) and meets basic call support needs. Overall it looks to be a promising concept and a unique “click-to-call” service that supports ad hoc social networking.

Other posts:

• Stuart Henshall: Why Phweet?
• Stuart Henshall: Who created the Phweetman?
• Pat Phelan: Phweet.com Talking on Twitter
• Phil Wolff: Phweet public alpha – from tweet to talk in one click
• TechCrunch: Call your Twitter pals with Phweet
• All public Phweet sessions

Tags: Phweet, Stuart Henshall, David Beckemeyer, Twitter, Televolution, TringMe, Pat Phelan, Truphone, Nokia N95

Voxeo is a hosting service for a variety of voice related business applications including IVR, conferencing services and proprietary enterprise business process applications amongst others. To encourage application development they provide a developer’s site with developer guides. Other applications deployed include auotmated speech recognition, school notification services, package tracking and a front end for voice biometrics authentication. Connections can be made via DID, 800-number with PIN, SIP and Skype. Summary from Supplier : Voxeo helps enterprises improve services and lower costs by automating and connecting their most common phone calls with IV and VoIP solutions.

Main Website : http://www.voxeo.com

Products and Services :

• IVR server hosting
• VoIP platforms hosting services
• Voice Applications
• Prophecy on-premise server license

Programming API Available : Yes

HTML Code Snippets Available : No

Main Category :Service Provider, Enterprise, Small Business

Recently a couple of posts discussing VoIP Quality:

Om Malik reports on a Brix Networks study, based on data collected on Acceptable Call Quality via their TestYourVoIP.com site. Note that Brix also announces the availability of this service as a Google Gadget (for Google Desktop) providing ongoing measurement of the quality of your connection for voice and video activities. The study reports an ongoing decline in VoIP Acceptable Call Quality from 84% to about 80% over the period December 2004 to May 2006.

Andy at VoIP Watch found MyVoIPSpeed Internet Connection Test and was using it as a tool to measure the connection speeds and QoS at the hotel he was staying at. I checked out my own home office connection and got this report:

Om talks in his post about degrading quality of calls received from callers using Vonage. I have been a Packet8 subscriber for almost three years and have found the quality to consistently improve over time to the point where I have minimal problems. I also find I am getting a high quality level with my Skype and SkypeOut calling with one exception: SkypeOut calls to some wireless phone services. Too much compression/decomprssion going on? first via VoIP, then at the wireless end?

I also ran the Brix TestYourVoIP and got a MOS score of 4.2, close to the MyVoIPSpeed result shown above of 4.0. The tests appear to have some level of consistency across the tests and do appear to reflect the quality of calls that I am experiencing.