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Will low cost unlimited cellular kill VoIP?

T-Mobile is offering unlimited calling to existing customers for $50 per month. If you’re a VoIP provider and news like this isn’t scaring you it should.

For year’s cellular carriers have raped and pillaged customers.  Today technology (like VoIP), the economy and savvy consumers have caught up to cellular carriers. And they’re doing something smart about it.

Giving people what they want – unlimited calling at a reasonable rate.

Sort of what the VoIP industry has been selling to consumers since it’s inception. See any problem yet?

Like when VoIP’s number one selling proposition and main consumer message meets a better service from companies with deep pockets that touts the same exact benefits – and more.

If you’re reaching for your TUMS right now I’m not surprised. Reasonably priced unlimited cellular plans are a serious threat to VoIP providers.

Most customers (business and residential) are looking for the basics when it comes to voice service. Quality, reliability and price.

Today cellular beats VoIP on all three fronts EXCEPT price. But soon that won’t be an issue either.

Think I’m full of it? Take out your crystal ball and think about this.

Younger generations are coming out the womb with cell phones attached to their ears (and or thumbs). Everyone and everything is “going mobile.” Even VoIP.

Then there is the whole convergence movement. The cellphone is convergence. Why have a desktop VoIP phone, softphone and VoIP client on your smartphone when you can just have a cellphone (maybe a dual mode phone).

But Garrett, what about my phone system?

Dude. There are already hardware and software offerings that allow you replicate PBX functionality using your existing cellular handsets and service. Not to mention GSM and CDMA gateways that can “cellular enable” your existing PBX if you’re into dinosaurs.

Younger generations are physically tied to it. It’s a better all around service. Offers convergence by nature. And there is an existing ecosystem that can recreate what most need from a PBX/phone system.

All that is left is price.

Perhaps unlimited cellular won’t actually kill VoIP. Well, not those folks doing more with VoIP then offering cheap minutes.

For the rest of you, good luck. Or maybe fair well is more fitting?

Garrett Smith

Garrett Smith is a Technology Marketing and Sales Professional

This Post Has 12 Comments

  1. Tsahi Levent-Levi

    Garrett,
    I think you are correct, but you missed one point – cellular is moving towards all IP. It isn’t happening yet, but will in the next generation network (4G, LTE – whatever your acronym of choice for it is).
    What you’ll probably end up with is cellular doing VoIP without the 3rd parties that do it today.
    Tsahi

  2. Dave

    I dont think so. VoIP still has a competitive edge over other services. Besides cheap national and international call rates, it gives longer call recording keeping your geographic number.Now one can have full control of his comms – can apply call diverts and modify the phone system remotely per one’s own wish. Nimbuzz , Truphone ,Jajah, Vopium – Thanks to all the VoIP services!

  3. Kiran

    Great post Garrett – exactly what I’ve been telling everybody. VoIP is not dead – it (Voice) is now a commodity application and has served its purpose of helping lower costs (although there is still some way to go) such that a user will not care if Voice is going on IP or Cellular or whatever.

    For the same reason – Enterprise IP PBX (esp. in the SMB segment) is pretty soon going to be non existent.

  4. Frank

    Feeling a bit dramatic today are we? Come on. That title is either misleading or poorly worded. VoIP = Voice over IP. What you describe MAY apply to the mobile VoIP provider market, but to say that low cost unlimited cellular will “kill VoIP” is just a tad of the melodramatic, don’t ya think? You been taking Tori Spelling acting lessons again?

    VoIP isn’t going anywhere. Sure, I suspect that VoIP in its various forms has helped drive down costs and create an environment where we may finally see cell carriers starting to go in this direction. That’s not a death knell. That’s a sign that VoIP is having an impact. If anything, we’ll see more VoIP as time goes by.

    And in the grand scheme of things, how exactly do you think all that backhaul is going to be done? Cellularly? No. We’ll still have copper and fiber and satellite communications, and as we’ve already seen, VoIP will become an ever larger part of that.

    It’s simple. Circuit-switched networks are inefficient. Yes they provide rock-solid performance when you get a circuit from A to B. But how many people, even WITH standard Baby Bell landlines, can say that anymore? Most regional phone companies use VoIP on the backbone anymore to make more efficient use of their infrastructure, so even that copper wire into your home doesn’t truly get circuit switched to the far end anymore.

    And how exactly do you justify the statements that

    “Most customers (business and residential) are looking for the basics when it comes to voice service. Quality, reliability and price.

    Today cellular beats VoIP on all three fronts EXCEPT price. But soon that won’t be an issue either.”

    Really? Again, if you mean mobile VoIP providers, you might have a case. But then say that. To say cellular beats VoIP in general is bogus. I don’t see businesses replacing their office PBXes or the phones in their stores with cellular.

    And quality? Seriously, you want to compare the quality of a CMDA or GSM cell call with a VoIP call? Throw in HD audio such as provided by some higher end VoIP phones (e.g., Polycom), and you have no case whatsoever. Cellular has inherent restrictions on call audio quality, whereas VoIP has already been shown to bring audio quality that goes well beyond the 8KHz sampling rate. And who’s to say that VoIP hardware makers won’t come out with mobile phones with high quality speakers and microphones. You seriously think cell phone makers will do that any time soon?

    Now as for low-cost, unlimited cellular impacting those involved in the mobile VoIP space, that’s possible. But I doubt it will impact that much, I really do. As time goes by, the major benefit of VoIP (namely, that’s it’s just another network protocol to handle) and its ability to integrate with other services and devices (computers in various forms from PCs to handheld units) will likely result, if anything, in cell carriers offering low-cost, unlimited DATA plans, where phone calls and all the other Internet connectivity ride the 3G/4G network. Ideally, we’ll end up with cell carriers acting as wireless ISPs and nothing more.

    And even assuming you did mean mobile VoIP providers specifically, who do we have to thank for the fact that cell carriers are now offering these low-cost, unlimited plans? Yep, those very same mobile VoIP providers. Let’s face it. VoIP, in all its form, has been a disruptive technology. In the end we should all benefit one way or the other. I have faith that those businesses involved in the mobile VoIP space (which are well run) will find a way to adapt. They’ve made it this far.

    Anyway, please consider your choice of words when titling your posts. This just comes across as link bait.

    P.S. It’s “farewell”, not “fair well”.

  5. Stephane

    I totally don’t agree with you!

    First, because here in europe we have unlimited plan from the cell provider till 2000 and it didn’t kill VoIP. Their price are still expensive. They want to make money and don’t want to give the call really for free between users that the VoIP are doing so : Skype to Skype; SIP to SIP.

    Too many features are in the VoIP area and are not in the cellular world.

    Also, there is still the problem of the roaming cost. A Wi-Fi connection help us to make VoIP call anywhere in the world at the same price, not our cellular provider!

    It’s of course possible than both merge one day but the business plan of VoIP and cellular provider are totally different, so not sure they can agree on everything.

    Garrett, do you really know a cellular provider who offer free call inside the network for monthly free plan like Skype or SIP provider like mine (ippi.fr) do? Nops! That is the BIG difference and I don’t think cellular provider will change their mind soon.

    Perhaps, something new will come between the two world…

  6. Chris Smith

    Frank said exactly what I think but he worded it much better than I could have, “Quality, reliability and price”, “Today cellular beats VoIP on all three fronts EXCEPT price”, although i disagree with the entire article, i find these comments more disturbing than others. Firstly, who says cellular beats voip in either area, it sounds like something the author just decided himself with no knowledge on the matter. The main reason i disagree is for the same reasons as frank mentioned, codecs on voip are easily changed and configured to prioritise call quallity and bandwidth, lower quallity codecs such as gsm can be used in a lot of voip systems as well but they are of lower quallity, as a rule of thumb, voip usually is of a much higher call quallity. I believe you may be comparing your home internet connection quallity and confusing it with the actual voip protocol. Yes if you have a bad internet connection and you are sending your calls over it, you will have a bad quallity call, broken up audio,delays etc but if you are using a dedicated link between you and your voip provider then reliability is unlikely to be such an issue. On the other hand, how many people have had a cell phone conversation cut off while talking, audio breaking up and having to search for a better signal etc. I strongly believe voip is more reliable than mobile and at the moment I cant see any logic for thinking otherwise, at the end of the day, hard wired connections have always been more reliable than wireless.

    In my eyes Mobile and VoIP both have their place in society, ive worked in the communications sector for a long time and voip really has been a huge hit, some of the bigger companies also use gsm gateways to connect with their mobile workers, it seems you think thats old technology but when multi bank gsm gateways terminating to PRI for connection straight to a PBX isdn interface were available, most companies I dealt with wanted one as integrating voip and cellular technology in house was putting IT managers in more control of the entire system and in the past few years have become more and more common.

    Remote workers are a prime example of how voip technology integrates perfectly with the day to day operations of a business and couldnt be replaced by mobiles. A remote worker usually will be provided with an internet connection to their home, pc and ip phone soon follow. By using voip technology the single internet connection will provide network access, telecoms, maybe fax, email, data and are as reliable as your internet connection. So, where does the mobile fit? It doesnt really help with the businesses needs unless its for a mobile worker.

    I think the entire post is very inaccurate and supprising that someone who clearly doesnt know a great deal about the communications industry would bother to write such a piece! Maybe if you had said will low cost unlimited cellular kill pstn (the theory that everyone will go mobile and enjoy free calls) you would have been in with a better chance of a debate, but with that question in mind, I personally will still say NO as mobile and pstn have their own place. Maybe look more into what voip does, its not just a way of getting cheap calls!!!! Nothing will kill voip other than an entirely new way of networking, the converged way of life is here to stay, basically if it can be turned into packet data then it will and should be!

    Obviously all my own views, other than the other 2 engineers shouting over my shoulder with further requests

    Chris

  7. Garrett Smith

    @ Chris & Frank

    If you notice I use the word “will” in my title and also state (at the end),

    “Perhaps unlimited cellular won’t actually kill VoIP. Well, not those folks doing more with VoIP then offering cheap minutes.”

    This means the post was written in the form of a reflective question, in which my conclusion was,

    “unlimited cellular will not kill VoIP as a technology, but it does have the potential to kill VoIP providers offering nothing more then cheap minutes.”

    @ Frank

    I don’t think you’re giving cellular enough credit. There is a current generation and future generations to come that will be tied to a cell phone.

    A large chunk of the decline in PSTN revenues/subscribers is due to user migration to using cellular phones. You can’t dispute that and I can’t see those users migrating back to fixed line services (like VoIP) unless there is a compelling reason for them to do so.

    Yes, VoIP will be here for years to come, but don’t count out the cellular guys.

    @ Chris

    I wrote the post. I’ve been using, selling and marketing VoIP hardware and services since 2003.

    You bring up some valid points in your response, but you fail to miss the point that when all things are the same (quality, reliability and price) who wins?

    In other words, would you rather have a phone you can only use in one place or one that “goes with you?” You might elect to go with the stationary option, but I don’t think others would. That’s just my opinion.

    Lastly, I don’t agree with VoIP being of higher quality and more reliable. At best I’ll give us a dead-heat. Again, just my opinion based on personal experience.

  8. Chris Smith

    Credit where its due, thats an excellent reply and was totally unexpected! I hope you dont see my comment as an attack on your character as thats is not how it was intended, more just an observation that not everything is how it seems with the communications industry. Ive been involved with the industry (networking and trans-communications) in depth for nearly 15 years and ive seen many opinions and unexpected changes thoughout this time and I still say nothing is certain in this ever upgrading industry but I do find that there are many other points that should be considered, how about the health issues currently associated with mobiles? Do people actually want to use the same methods of communication in and out of the office? Would a single mobile phone provide the reliability of using other methods too (such as using ip phones in the office as well as mobiles on the street)? I think the answers are dependant upon the company/person in question but i believe they would be a decidng factor of the future of all communications. I can only judge on my experiences personally, but I find most people dont like using mobiles for long calls, which a lot of businesses do make, ive seen mobiles refuse to accept calls until restarted which would be unacceptable in a business environment. I could go on but I think its kind of out of the scope of the topic!

    I think your point of IF everything is equal throughout the services (quality, reliability and price) then who wins, is a little short sighted as there is much more to deciding which method of communication to use than just those 3. If truely everthing is equal then surely mobiles would be the method of choice, but in our world nothing is ever equal! Many things such as redundancy, availability and operating requirements and costs all need to be factored in too. For the mobile industry, the only redundancy would be to carry 2 phones where as voip could be a second connection to the provider, gsm gateway (even though old hat now?) and good old pstn backup. Also simple things such as battery life and replacement would have to be considered if mobile was to be considered a viable option.

    Lastly as I dont want to make this post as long as my last one, with regards to reliability, then I can understand why you like the mobile option as for most cases its absolutely fine and for the soho world its often considered acceptable to only use a mobile number (here in the uk anyway) but one of the big hits for reliability in my eyes would be battery life, with voip this usually isnt an issue as using PoE the phone never even requires a plug socket, with mobile you would have to have every employee supplied with an electrical outlet near their station bringing in even more issues. I wont look at the other issues as i mentioned I would like to keep this short.

    Once final comment, I do totally agree that for residential purposes, mobiles with unlimited calling would beat voip 100% as the requirements are very different, I also believe it would beat pstn too as soon as their is a reliable solution to providing data/internet connections other than over the pstn lines, although in the US I hear you can just get an internet connection without a phone line, here in the uk thats only possible via cable and its totally dependant on where you live.

    Thanks for your reply, its good to know you are reading our comments!

    Chris

    BTW as voip is a constantly evolving technology and currently can use codecs of a much higher quallity (wider bandpass filters) I dont believe mobile will ever catch up with voip in this area. However im prepared to accept in a basic voip vs basic mobile service reliability could be better on the mobile front but in well designed networks with real voip equipment (not asterisk, although i do love asterisk, it does have its issues) i believe you can get very close to the highly acclaimed 5 nines for reliability!

  9. Chris Smith

    @ Kiran
    ” Enterprise IP PBX (esp. in the SMB segment) is pretty soon going to be non existent”

    Who are you trying to kid?? VoIP has never been so strong as it is right now for businesses, everyone wants convergence, presence and IM. They want it right now and they want to own their own equipment. Ive never heard such rubbish in my life!

    Maybe Garrett has a point for residential customers but buinesses plan for a long time in the future, 10-15 years sometimes for big businesses and they wouldnt be investing in voip equipment right now if your comments were true!

  10. Garrett Smith

    @ Chris

    Thanks for spending the time to discuss this. It has been very valuable (to me at least).

    I think that convergence of devices is inevitable. While I use to subscribe to “pick the best tool for the specific job”, I know feel that it is unrealistic to expect people to carry and maintain multiple devices if just one will do.

    Some will continue to use multiple devices, but I think you’ll see the majority take the path of least resistance and try to consolidate.

    I agree with your point that the emergence of wideband voice codecs will change the game for VoIP services, allowing them to be known for something other than price. This is especially true ss bandwidth availability and reliability continues to increase (imagine broadband as a utility).

  11. Chris Smith

    Garrett,

    I agree, its always good to have a second opinion with these matters :-)

    I think convergence sure is here to stay for everything possible, currently at home, i use a mythtv server, asterisk server, ip phones, mythtv frontends everywhere that we watch tv, ip cameras for cctv, home automation etc. So i clearly believe convergence is always the way to go and it maybe taints my view slightly, but as its a relatively new advancement its only starting to show its true colours and dispelling myths about unreliability etc. However I do see your point that people will want to use a single device, but the question for me is, with the emerging WiMax technologies and other wide area wireless technologies, people will easily be able to connect to a high speed network and have a relatively high bandwidth. With that in mind, if i were to use a mobile IP handset for connection to a voip network to make calls while on the move, would this then be a mobile as we know it, or would it still be classed as voice over a data network? From the info I have seen so far, it seems the mobile companies are already looking at this and maybe xG (probably not in time for 4G) will be using voip to carry voice on a high speed wireless data network, so the other possible theory could be that voip will be enhanced and result in being the communications standard for voice. I know the overall aim for many mobile/cellular companies is to have everything on a single IP based network but are experiencing the difficulty of having cdma for the voice, they cant switch to IP only until the handsets can deal with this and the handset companies wont design a handset when up to now theres little demand. So maybe in the near future we wont even need pstn either as if WiMax or its alternatives can provide reliable and high bandwidth and voip can provide the voice, your home could be fully converged with no pstn or cable required. The next question could be, Will the availability of high speed wide area wireless networks be the end for pstn/mobile providers?

    Maybe WiMax isnt the answer, but im sure the next wireless technology after will be !!

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