IP telephony services accused of freeloading

Services such as Skype benefit from multi-million pound investments in infrastructure made by mobile operators yet make no contribution, industry figures argue.

IP telephony companies like Skype and Truphone are freeloading unfairly off the investments of mobile network operators, says a leading consultant.

"Mobile operators invest in providing a reliable and extensive mobile network," said Ray Tarling, head of mobile content delivery for Alpheus, which provides consulting services to banks and phone companies. "They also heavily subsidise handsets which provides a customer base for new technology providers, like Truphone, to target."

He says Voice over IP (VoIP) service providers pay nothing towards the costs of handsets or network operations, yet make gains from running their services across these networks.

This 'freeloading', he says, explains the actions of some mobile operators who are blocking VoIP traffic on dual-mode Wi-Fi and GSM devices, like the new Nokia N95 smartphone.

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"Mobile operators have major expenses and investments to keep up," said Tarling. "These VoIP guys think they can just get everything for free."

He said that customers benefit from subsidised handsets, and that VoIP companies who don't offer any subsidy on devices are 'disruptive to that model'.

"Operators want to give their customers a good quality of service, whatever else you might want to chastise them for," he added. "The service they provide is amazingly good. Calls generally don't get dropped, and quality is high. VoIP is a lottery - sometimes good sometimes bad."

He says there are cases where VoIP companies do work within the operator community, like next-gen operator 3 which has a deal with Skype. "Under that model, 3 can make sure that services are properly provisioned and tested and ensure quality," said Tarling.

Truphone is getting publicity through 'claiming to stand up for consumers against evil operators', he says. "But I don't think they can win that way. They'd do better to accept the standard model and come into the operator fold. If they want to give out phones themselves, that's a different matter. But I don't think they plan to."

Tarling warns that businesses relying on mobile data services should be especially wary of apparently free IP telephony: "For them, quality of service is more important than for a guy in the street. They should take care what they use."

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"I think that mobile operators are going to have to lump it and get on with their lives," said Rob Bamforth, analyst with Quocirca. "I think they have to embrace IP, like BT has done on the fixed line side. It's a natural progression, and they have to go with the flow."

Bamforth says the whole world is demanding everything for a flat tariff: "This is what's impacting operators, and not what other people are offering over IP," he believes. "Operators should stop acting like King Canute and get on with adding value of their own."

Bamforth stressed that he was not taking sides, and acknowledged that operators do face considerable overheads in essential areas like infrastructure development. "Their real problem is their own business model, and their plc status with shareholders to please and investments to keep up. It's good that they face competition, but it would do no one any good for them to lose out massively. We all rely on them to keep improving their assets."

Bamforth said that in the long term he'd welcome a more level competitive playing field, where VoIP players and mobile operators faced the same regulatory pressures.

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