Vodafone to keep VoIP out of the 3G network

• Tags:
• 3G,
• VoIP

John Delaney Ovum

Published: 27 Jul 2005 08:50 BST

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Vodafone Germany plans to disable calls from the likes of Skype and other VoIP providers, beginning July 2007. A spokesman declined to comment on the reasons behind the move, but remarked that "2007 is a long way to go; anything may happen until then", implying that the company could reverse its policy.

None of the other national operators that Vodafone controls have adopted a policy of blocking VoIP. However, the French operator SFR announced in March 2005 that it intends to block both VoIP and peer-to-peer streaming traffic. Vodafone is a 44 percent shareholder in SFR.

The arrival of 3G broadband networks raises the question of whether third-party service providers could target mobile users with cellular VoIP, posing a threat to mobile operators' mass-market voice revenues. The answer is 'not yet'. Current 3G deployments do not provide data rates that are high enough or consistent enough to support a carrier-grade, phone-based voice service over IP. Operators are currently planning to deploy the HSDPA upgrade, which will provide higher data rates in the downlink, but this will still leave the uplink too slow. That upgrade, HSUPA, is a long way off for most operators (the CDMA operators are in a different position, since the current upgrade to EV-DO, called rev. A, incorporates enhancements to both the downlink and the uplink).

So why are some mobile operators concerned enough about VoIP to block it out of their networks? The answer is that, although mass-market mobile VoIP is a long way off, some users are starting to run VoIP clients on 3G-connected laptops. In the near future, this phenomenon is likely to spread to PDAs, and possibly even some high-end smartphones. These users are typically high-ARPU individuals who are frequently paying roaming tariffs.

However, in our view the current concern of operators such as Vodafone Germany and SFR is not primarily revenue substitution from conventional voice to VoIP. We believe that they are more concerned about the demands that such 'freelance' VoIP users place on the performance of the network as a whole. In other words, mobile operators don 't want people simultaneously avoiding their call charges and hogging 3G network capacity. Mobile operators have more control over access to their networks than ISPs do, and we expect to see more of them following the lead of SFR and Vodafone Germany, by at least making contingency plans to prevent VoIP traffic from obstructing early growth of 3G in the mass market.

John Delaney is a principal analyst in Ovum's Consumer Group. The team analyses the consumer market for data and multimedia services on mobile networks and the Internet. He can be contacted directly on jpd@ovum.com.

© Ovum 2005
Advising on the commercial impact of technology and market changes in telecoms, software and IT services

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