Femtocell Opinion, comment and reviews

Two major leaps in mobile phone tariff plans

Two Tariff LeapsI've noticed some significant changes in tariff plans offered by some European wireless networks recently. Do they show a different path ahead, and set the direction of things to come?

T-Mobile imposes VoIP surcharge on their mobile network users

T-Mobile, the German network, announced they would now permit VoIP applications to run over their mobile phone network. They had previously banned Skype on both the iPhone and Blackberry, causing a furore in the press. Wanting to protect their voice revenues, they didn't like users potentially paying data traffic rates (1Gbyte can cost as little as $10 and give thousands of minutes of voice service).

Their latest offer is a monthly fee of 10 Euros (approx $10), which will permit the customer to use any VoIP services. I believe that data charges still apply in addition to this fee.

Whilst 3 offers completely free Skype calls on their network

The UK operator "3" owned by the Hutchison group takes a completely different approach. They offer a Skype service which is completely free of charge. After buying the handset for $100, you can make unlimited Skype calls for free without ever needing to top-up your prepaid account or pay a monthly fee. This includes calls to other 3 Skype phones as well as any Skype users on the internet. Clearly they are relying on you using non-Skype services too, such as calling landline or other mobile numbers, and receiving incoming calls from ordinary phones. These paid services are charged through prepaid topups and termination fess.

Following wireline network offers of recent years 

This approach is similar to what we saw in wireline voice services a few years ago. In order to encourage users to switch to new service providers, calls between customers of the same new provider were free of charge. This encouraged their customers to promote the service to their friends and family, effectively using viral marketing to increase takeup. Mobile operators have also used similar "mates rates" style of tariff plans in the past, so that those calling within the same network are charged less. An example is the family tariff packages from Orange and O2 (here in the UK), which include free calls between family members within the fixed monthly fee.

These moves show the contrast in how mobile operators are dealing with the dilemma of VoIP.

  • Voice remains the primary revenue generator for mobile networks and still commands a premium price, even though mobile data traffic now exceeds voice in most mature networks.

  • Different operators are taking quite different approaches to dealing with this threat. Where strong competition exists, cracks are beginning to show and we may see further innovative offers such as the 3 Skype one above.

  • Perhaps in the very long term, we will see pricing based on data traffic with a premium for high quality/priority traffic as required for voice and video streaming.

How does this impact femtocells?

My guess is that something akin to the "3 Skype" package would need to be offered (free unlimited calls to other femtocell users), rather than charging a monthly premium for the service. But best effort is unlikely to be good enough - justifying a premium for higher priority voice and streaming traffic,

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