A new revolution in mobile telephony

Applications such as Skype let users make free calls using VoIP technology The high speeds of the new 4G network are set to boost their popularity further

International calls are the last stronghold for cellphone operators.
International calls are the last stronghold for cellphone operators.Dado Ruvic (Agencia Reuters)

Speaking to friends or family in far-flung countries using Skype on your computer is set to become a thing of the past. The application - as well as other Voice over Internet Protocol (VoIP) programs like it, such as Viber and Line - is breaking the ties that used to exist with computers and laptops. They now work on hundreds of millions of cellphones, despite the poor-quality of calls when they are used over the current 3G cellphone network.

The new generation of mobile network, 4G, should solve that problem for customers, given that the high-speed connections available will allow users to speak on very high-quality lines. The increasing availability of 4G connections will see a huge rise in the use of VoIP applications, allowing users to essentially speak with friends and family for free, according to the consultancy firm Gartner. It's a market that will generate 24 billion euros in 2015, according to Frost & Sullivan.

Skype - which, with more than 300 million users is the most popular way to speak over the internet using a computer - has already made the jump to cellphones. "More than 100 million people use Skype from their smartphones," explains a company spokesperson, speaking from its headquarters in Palo Alto, California. "Our application is installed on approximately one in every three iPads, one in every four iPhones, one in every five Android phones and one in every three Windows Phones."

Microsoft spotted this market a while ago and bought up Skype in May 2011 for 5.92 billion euros. The Skype application allows cellphone users to speak to any other user who also has the application installed for free. But the company charges 0.022 cents a minute if the user makes a call to a phone without the application, part of which goes to cellphone operators in exchange for use of their mobile networks. Users of Skype spend a total of more than 2 billion minutes a day talking via the application, and part of that time will be charged for in the future, as more and more calls are made from cellphones.

More than 100 million people use Skype from their smartphones"

Juniper Research predicts that a billion people will be using VoIP applications to speak via their cellphones in 2017. "Voice calls on mobile phones will lose their value and will end up being offered for free, as has happened with calls to landlines," explains Jorge Pérez, a professor of ETSI Telecommunications at the Madrid Polytechnic University.

The idea of being able to talk for free opens up a number of doors to a large market. Mobile VoIP applications need a flat-rate data plan to work, and when calls are made to cellphones without applications or a flat-rate data plan, they cost money. However, "mobile VoIP brings down the international tariffs of conventional operators by 90 percent," according to Alex Bryszkowski, the CEO of the virtual mobile operator Movizelia. "The international market will become the major market for mobile VoIP."

International calls are the last stronghold for cellphone operators. In Spain they accounted for 646 million euros of revenue in 2012. The market is growing in terms of consumption, but revenues are falling given that tariffs are coming down. Operators that specialize in international calls and virtual mobile operators are gradually pushing prices down thanks to VoIP, a trend that is set to continue.

Movizelia has come up with a VoIP application for cellphones that will cost even less than Skype. Fonyou, another virtual operator, has also opted to do the same, with an app that's aimed at expatriates who want to call their families but who do not have an internet connection.

Juniper Research says a billion people will be using VoIP applications in 2017

Mobile VoIP will pave the way for a lot of niche businesses. It is currently still an undeveloped market, given that "3G networks force the user to stay still in a place with good coverage in order to use Skype, otherwise the sound becomes distorted and there are also delays in the conversation," explains Antonio Gil de Gómez, a partner from Peoplecall. "When we saw the quality of 4G networks we decided to go for it," he adds. In a couple of years, Europe will be completely covered by 4G. There is just one more issue to be resolved: how cellphone companies will deal with the loss of revenue from voice calls. "Traditional operators must see mobile VoIP as an opportunity, because they use data networks, and they will be able to use these to recover some of the revenue they will lose from international calls," explains Marta Muñoz, the EMEA telecommunications research director at IDC.

The Nordic operator TeliaSonera has already raised its mobile data tariffs to compensate for the situation. "The rise in income from data plans will not compensate for the losses of international calls," Muñoz adds. "But mobile operators have been working with very high margins when it comes to voice calls, and they need to bring them down now."

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