1. An analysis of the actual mobile telecommunication industry and upcoming changes

    Is the exact same thing happening to the mobile telecommunication industry than to the music and movie industry?

    [Originally posted on the 29/09/2009] The arrival of Smartphone and app stores such as the Iphone, blackberry or android has made a huge change in the mobile telecommunication industry.We are now using our 3G connections for more and more activities including VOIP communications and relying less on “classic” plans with a certain price for a certain amount of communications. We stopped spending money on SMS (a big source of revenue for telecommunication operators) since we’ve got push emails and access to our social networks through our mobile. There are, of course, examples of users sending thousands of SMS a month but that’s because there are unlimited plans for SMS usage.

    One could compare it to the evolution which happened in the Internet field.Few years ago, those unlimited ADSL plans didn’t exist and we were paying based on our consumption. Then new competitors arrived and classic internet providers had to change their business model and start proposing unlimited packages. We went from a “pay what you use” system to a “pay to get access” model or data package. The exact same thing is happening in the mobile telecommunication industry.We are still struggling with high communication costs and amazingly high roaming fees. Paying for something we could already get “for free” using VOIP systems like Skype or Ebuddy. But that’s about to change, in an abrupt way. Let’s have a look at three typical and contemporary examples:

    1) Apple and Google Voice:

    What does exactly Google Voice do? It reduces your bill at an astronomical rate by allowing your phone calls to be automatically placed over VOIP technology instead of relying on classic networks.

    Actual situation: AT&T, only Iphone reseller in USA is pressuring Apple to block the arrival of this application on the App store. Why? Simply because AT&T is making too much money on communications for allowing something like that to arrive. If it were to happen, and it will, that would represent the biggest threat to those operators since a long time. And imagine that Google Voice is only available in USA for now…

    My guess: Google Voice is already available on Android (Android and Google Voice being both Google products) and the FCC is investigating the Apple / Google case. By the end of 2009, Google Voice will be fully available on Iphone and by the end of 2010 any Smartphone users will be able to get a Google Voice phone number, in any 3G equipped country. That’s the typical defence of an old fashion industry against the Internet revolution. If you don’t know how does Google Voice work? See the video below:

    2) Free and the 3G license in France:

    France has 3 historical mobile telecommunication operators (Orange, SFR and Bouygues Telecom) sharing a big piece of pie and making illegal agreements on telecommunication prices.

    Actual situation: Free / Iliad, an Internet provider, which already changed the Internet landscape a few years ago, now wants to get a 3G licence for launching its own Internet based telephony service. Unfortunately, the mobile telecommunication lobby is quite powerful in France and the government is still “considering” if it is necessary, or not, to let Free enter the mobile telecommunication industry. Xavier Niel, CEO and founder of Free recently declared that he would decrease the price of telecommunication by 1 000€ if he were allowed to enter this market. The government earning 19.6% in taxes on all telecommunication bills, you can easily see where the problem stands…!

    My guess: The European Commission will get into that matter and oblige the French government to allow Free to get a 3G licence thanks to the free competition European law. It may not occur before the end of 2010 and give some time to historical operators to start providing those services at an absurd price but when it will, we will observe a kind of “déjà vu” evolution from a “pay what you use” to a “pay to get access” system.

    3) Skype being sold by EBay:

    Skype is a worldwide phenomenon being used by all the generation Y and globally speaking by almost 500 million users. Few years back, the founders of Skype, Janus Friis and Niklas Zennström, sold the service to the EBay giant. However, EBay never found a way to make money on that service and kept it as an add-on to their E-commerce conglomerate. Recently, with the arrival mobile app stores, Skype got onto the Iphone and people suddenly realized what potential Skype had: to become the leader of VOIP communications on every single mobile phone (and I mean all mobile phones, not only Smartphone. I’m ready to bet that Android will be the biggest phone OS by the end of 2010 and that every single phone will have an app store access).  Now, EBay not being able to turn Skype into a cash-machine is looking forward to sell it.

    My guess: A group of VCs are on track right now to get their hands on Skype, make it a start-up again and focus on mobility and becoming the standard VOIP provider on mobiles. There are still uncertainties about this deal, but there are good chances it will happen. And when it will, Skype will be massively distributed on mobile phones, including VOIP over 3G, making it, de facto, an industry leader.

    Those three examples are quite emblematic of the actual situation and the oncoming changes that will occur, mainly in 2010 and 2011. Internet has revolutionized quite a few industries already, with the wins and losses that you already observed but once again, it is ready to strike.

    I’m looking forward to that evolution and it will be really interesting to see who will be the overall winners.I would personally bet on Google, once again (even if Skype might be a good challenger), moreover if you take a look at the African continent. The founders of Google said that the second billion Internet users will come from mobile technology and has you can clearly see, they are already getting prepared for it.