September 12, 2006
OPINION://Truly scrumptious
Sometimes, I’m glad my brother came up with the slightly corny title of this humble blog. You stumble across something utterly Telepocalyptic, and you’ve got the volcabulary right there to describe it.
I was being badgered before the conference by an infinite number of PR folk, most of it irrelevant. (Even more of a sin: boring!) One start-up came in via the right route: Skype me with an IM, explain in 2 lines what you’re about. I think you’re going to be hearing a lot more about them. The next Skype? Well, we’ll see — the telcos may be a bit wiser second time round.
For those who know PhoneGnome, this does a similar function for mobile phones instead of landlines, just 100% in software. For those who don’t know PhoneGnome, read on. This is a goodie.
The company is Truphone, a UK-based venture-backed company. They’ve done what has been anticipated for a long time, and made it (relatively) easy to turn your cell phone into a wifi phone. But with a few big twists.
Provisioning isn’t Skype-easy, but it’s pretty easy still. Send a text message, get one in return, click, install, set up WiFi access points.
You then dial as normal. Press the green button. NO SPECIAL APPLICATION UI. If the other user is on another Truphone device, you’re through. If they’re on a landline in 40-odd countries (or US/Canada cell phone), you’re also through. Note: you’re not a penny poorer. The price of PSTN calls is effectively zero now — official death of the metered minute, full report at noon. Want to call Timbuktu, a high termination fee mobile or non-geographic or premium service? Deplete your pre-paid Truphone balance. Or just pay the usurious mobile rates if you insist — instead of pressing the green button, make a charitable donation to telco shareholders using the menu.
Would Sir like to pay, or call for free?
This is fixed-mobile convergence alright, but on the user’s agenda. If this takes hold and 5% of users adopt this within say 24 months, the pricing pressure will be evil.
There are some wrinkles. It currently only works on selected Nokia E series phones, targeted at enterprise users. (These have the necessary SIP stack, CPU, flexible Symbian UI, codecs, etc.). Mass-market Nokia N-series phones are in the pipeline. No doubt other manufacturers would like to have the “free phone calls” feature, too — you can imagine it being somewhat of a disadvantage not to. (Understatement is your friend.) They’re also addressing the consumer market, because their investors want that — yet the sweet spot is probably small and medium business (who can afford the devices and will gladly bypass carrier handset distribution channels).
Speaking of which, I’ve been consulting to anonymous handset vendors on this topic. The day of reckoning is coming for the operators. The handsets are creating the incremental value, not the networks. The value of subsidy in effecting lock-down is decreasing. The price of handsets is falling, the number of SIM-free unlocked handsets being sold is rising. The operators will resist these devices entering their channels. Bad luck, folk will just buy them tax-free in the airports as they go on holiday. You can’t compete against your customers.
Not a good day for investors in mobile operators, I’d say. Truly buggered by Truphone. Oh, and did I mention that their vision involves eroding some of those juicy SMS margins, and deploying features like voicemail to email that the operators refuse to roll out? No wonder they all look rather pleased with themselves.
PS - I’m not being paid to write this stuff, although I’ve grabbed a loaner Nokia E60 off them to play with the service. Watch this space for my experiences of using the beta product in the real world. This is the first arbitrage service in ages I’ve actually wanted to use.
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The Beginning of the End for Traditional Cellular Wireless from Fractals of Change
Martin Geddes, a smart telecom strategist (that’s not necessarily an oxymoron), has an important post about disruptive UK newcomer Truphone. The company’s service and free software take much of the cost out of cellular calling - especially internat...
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The picture has been emerging for a long time and the power is now definitely in the hands of the handset manufacturers. It puts Intels investments in WiMax into perspective and makes you wonder whether the future will be Handset manufacturers subsidising (or just providing) the network access (and requiring, say, Nokia branding of the access) rather than the current, reverse situation. (Skype already effectively do this with Boingo and the Cloud).
I tried to sign up with Truphone from Thailand, but never received the return SMS - I'd been waiting for someone to launch this kind of service since I got my E60 a few months ago!
Great post. Agree there are some good things about this. Mobile operators are doing smiliar things with UMA & IN (I'm guessing you dislike these concepts), including giving cellular users a fixed line termination number to make it cheaper for friends to call them.
TeliaSonera just launched this in Denmark. It's not quite the same, but near enough.
Posted by: at September 13, 2006 09:32 AMHey Martin, I just wanted to say thanks for blogging this stuff. In the forthcoming digital reputation I will award you some stars as being a good information hunter/gatherer. :)
Posted by: at September 13, 2006 11:55 AMA tiny correction - Truphone already has voicemail to email as a standard feature. Otherwise spot on!
Posted by: at September 13, 2006 12:03 PMI have been using the truphone service in Beta and can claim to have made the longest truphone call and also the most minutes on the network. I am totally dependent on the service and it has saved me hundres of Euros / Dollars / Pounds in recent month. With the Beta release it is real worthwhile to download it as it is stable, very cheap and hard to beat from any existing VoIP service out there. I also love the call quality, I often do not have good 3G or GSM coverage at home or in the office. truphone delivers to me through my WiFi hotspot crystal clear sound quality. Guys keep it up; this will be huge! Be TRU, join the movement!
Posted by: at September 13, 2006 11:25 PMalthough this is interesting, a couple of questions jump out at me: l) what is the business model; and ii) how does truphone really make money.Martin, perhaps you can give us some clues on this? presumably their software is proprietary, therefore are they going to licence this to 3rd parties or to the non-telco world? after all a "real" business model is what moves this from really interesting to something that says "wow"--potentially highly disruptive
Posted by: at September 15, 2006 02:30 PMA further question to my last post. If the cost of terminating pstn calls is almost zero for the mobile operator (any voip operator, for example), but for the customer there is still a cost associated. You can also download many softphones clients from other providers onto a dual mode phone and get the same results if you say already have a voip account with another provider. you just have to provision the softphone with the account of the voip provider.
Again, not sure what is so unique about truphone and again how they actually make money--ie are they simply discounting intl calls since they still have to pay termination somewhere? can someone pls fill in the blanks?
Posted by: at September 15, 2006 02:47 PMTruphone is a mobile VoIP operator/service provider and the business model is exactly the same as Skype - i.e. it makes money on per minute call charges to destinations outside the relevant free bundle, and it also makes money on inbound call termination in the UK. (This is why the bundle of free outbound destinations is much larger than for the US/rest of world). See more details on the web site at http://www.truphone.com/scn/more_info/what_does_it_cost.tru.
Posted by: at September 15, 2006 03:38 PMif you give a customer a telephone number in the UK are you giving them a fixed geographic number, a uk mobile number or a non-geographic number? is the intention to offer a subscription service or simply a pay for use model. i presume you are also using least cost routing for the intl calls since that would allow you to offer them more cheaply than others.what i dont understand is how you can make much money simply by offering something slightly cheaper--for example many mobile call packages (especially for business) include free calls to all europe and the US.
Posted by: at September 15, 2006 07:02 PMMartin, i love reading your blog and your often witty insights. however i don't agree with your assessment of truphone. all they offer is access to a wifi network (and that network also has to be open). when they are not in wifi coverage, the calls will go through the normal mobile network. some savings yes, but hardly revolutionary. there are also a number of other companies that offer what is essentially a downloadable softphone that runs a SIP client onb windows mobile, symbian, linux etc. (eg cospeed is one).
What would be truly exceptional would be the capability to route SIP over the GPRS network (currently difficult due to bandwidth constraints of gprs)--that would be a BIG deal.
Posted by: at September 16, 2006 11:20 AMThanks for the compliments -- my ego feels suitably inflated.
Remember that I write from the perspective of the user, not the vendor. Thus Truphone is very significant, in that it does what the iPod and Skype did before it: make a technology usable and accessible to the everyday user, rather than add features.
All arbitrage business models tend to ultimately be self-defeating. Whether Truphone as a busines succeeds is now largely immaterial to the market as a whole, since the technology is now developed and out there. To sustainably create value they have to expand beyond arbitrage -- but you can make one hell of a good living feeding off the crumbling interconnect model of SMS and POTS/mobile.
By also issuing you with a parallel mobile number, Truphone have the opportunity to attach their leeches to the termination revenue vein. By controlling the UI they can also engage in various ad-funded business models. Plus they can take some of the friction out of the system of getting new service features and arbitrage the "premium calling features" market. So I think they'll survive and thrive.
Skype is a tiny minnow in terms of revenue, but a huge impact on user perception and market pricing. Truphone looks similar.
All that said, I wouldn't be the first pundit to pick a winner and get egg on his face, so time will tell.
As for doing voice over GPRS, come to my breakout session at the Telco 2.0 event (www.telco2.net/event) for the coming-out party of such a vendor :)
Posted by: at September 16, 2006 02:55 PMMartin's comments are all valid, however one other factor is that Truphone's open-source network architecture costs two full orders of magnitude less than that of a traditional telco for similar scale, so they have a very significant cost advantage to play with in any pricing war.
In response to Kerry:
(1) The WiFi can be encrypted, but you must know the key - this is likely to be the case for home and office which are the origin of around half of all mobile calls today. Also, the increasing ubiquity of WiFi in hotels and coffee shops takes in another large category of calling locations.
(2) The disadvantages of most mobile softphones include poor battery life, audible echo, and a separate address book. These three together are enough to prevent mass adoption, and Truphone on the E-series suffers from none of them.
Kerry - I would be amazed if you, as CEO of Vonage UK, agreed with Martin's assessment of Truphone - that would probably be a sacking offence in the eyes of the Vonage hierachy?
What IS revolutionary about Truphone is that in UK users do not have to pay a monthly fee to setup or use the service. Nor do they have to purchase new dedicated VoIP hardware. If you are lucky enough to possess one of the supported handsets (and there are now a number of millions of these deployed in Western Europe), they you may transform it from being a GSM phone into a 'converged' GSM/VoIP phone in about two minutes flat - AND AT NO CHARGE!
Whilst at home and in the office (assuming that you have WiFi coverage in these locations), you will be able to make and receive calls at minimal cost; and can continue to use the SAME PHONE (with the same address book and SMS message store) on GSM as you travel around outside of WiFi coverage.
I think that is pretty disruptive and revolutionary - and would love to debate further on the subject!
Posted by: at September 17, 2006 10:15 PMInteresting thread and good observations
From my perspective this is all great innovation and demonstrates how things can be done (and should be done?) better
In the end though we always hit mass market economics ...
Last time I looked only approx 5% of new handset sales in western europe qualified as smartphones (e.g. symbian-like or windows mobile-like).
This puts a significant cap on the addressable market for truphone today, or indeed mobile skype (even allowing for the more esoteric setups which could leverage your "free" mobile minutes).
The "soft" client innovators have known for quite some time they need to get their apps embedded on feature phones to get the mass market traction necessary for them to get significant license revenue. The handset manufacturers control this for feature phones. And possibly can't afford to allow this yet for fear of disrupting their exiting mobile opco customer base?
Then you need to educate the consumer - not just the early adopters but everybody else. This takes time and assumes the consumer is interested - which if voice pricing continues to decrease on traditional technologies & opcos continue multi-play bundling then perhaps they're not?
Disruptive - yes, but is it a zephyr or a perfect storm?
I live in the US and bought an unlocked Nokia E60 in May of this year. My main reason for buying this particular phone was the possibility for making VoIP calls. The support for SIP based calls on the E-series phones "out of the box" is challenging at best and the lack of support for NAT traversal (Nokia has promised to add STUN support before the end of 2006) limits its use for VoIP in general. What Truphone has done is make VoIP on the E-series phones very simple and the voice quality is excellent. The "software" that Truphone offers for the E-series is really just a program that automates the SIP setup on the phone. If you knew the settings you would not need the software at all. However, this software makes mobile VoIP on an E-series phone more accessible. Now it's not the techno-geeks (a group in which I include myself as a member) that can use mobile VoIP but anyone that knows how to send an SMS. I think the future is bright for Truphone.
Posted by: at September 24, 2006 03:09 AMthere are so many problem with relying on wifi for a phone call that it's borderline ridiculous.
1 - service area. wifi zones work a couple hundred feet at a time...at best. that eliminates using it in a car.
2 - coverage - ummmm, poor. it's would take a millenia to get the same kind of coverage out of wifi as you can get out of lower freq/higher power cellular. don't know where wimax is going to take this but it does has some rf and power consumption problems to work out before it goes anywhere.
3 - handoffs. ok, let's assume that you can get past the first two problems....let's get as basic as walking down the street and hopping from one wifi zone to the next. the only reason that it works in cellular land is because the protocol is able to tell you who your neighbors are for hopping and one network operator is able to keep that connection "open" and "reserved" for you as you go from cell to cell with homeruns back to the SAME infrastructure....yeah, that doesn't work using random wifi hotspots - be they FON enabled or not.
4 - security....need i say more?
5 - QoS. Lordy, what happens when you are sharing a connection with the kid downloading 3 movies at the same time?
6 - finally, if you want to hand off a phonecall, seamlessly, from the wifi hotspot in the office to the cellular provider to the wifi hotspot in the coffee shop??? like skype, nothing more then a niche geek toy. the concept may become a feature on someone elses (moto, cisco, etc.) software stack but that's about it.
r.
Posted by: at October 2, 2006 09:59 PMRe: truphone
As a dyed-in-the-wool Skype Dualphone (DECT+USB+landline) user I have been using the mobile + VoIP approach at home for over a year now and I just can't wait to extend the experience.
It occurred to me that if the mobile phone has navigation (GPS + elecrronic compass) options as is becoming popular in Japan, then it is just a matter of time before the phone says something like; "free call zone 100 metres straight ahead ... you can make it ... just another minute..."
I have been using tringotel business line for the past few months. No major complaints about call quality.
Lots of great features and very easy to customize. But, there is no way to set up multiple voicemail boxes. This is unfortunate because I have a partner. You can use an answering machine with multiple boxes instead, but all of the great Voip voicemail features (including. .wav messages to email) are lost. Lingo and vonage might have the same weakness.
Posted by: at March 16, 2007 06:21 AM