Truphone Breaks the Carrier Barrier

Truphone's announcements last week overcame a significant carrier resistance barrier to using VoIP-enabled services to reduce international calling costs. The key secret here was that it required the combination of Truphone's iPhone and iPod Touch applications along with the Apple Application program that leverages Apple's established carrier relationships to break this barrier.On Friday I was finally able to complete provisioning of Truphone on my iPhone. It happened at this time for three reasons:

• The association of my original Truphone number and account with a Nokia N95 handset and the "416" number I eventually transferred to my iPhone whose acquisition as an upgrade on my carrier account minimize my iPhone costs over the term of the three year contract.
• The original iPhone application only supported outbound calling; I would have lost the Truphone inbound calling feature I had on the N95.
• For this reason I left Truphone on my N95 (using a deactivated SIM and my home office WiFi access point) pending the arrival of a Truphone for iPhone application and service that supported both inbound and outbound calling.

Recall also that the original Truphone for iPhone only allowed calls over WiFi access points with no ability to pass them through the underlying 3G wireless carrier. Truphone's two announcements last week addressed three issues:

• Truphone for iPhone now supports both inbound and outbound calling
• Truphone added the Truphone Anywhere service such that Truphone for iPhone calls could be made over the underlying 3G carrier as well as over WiFi.
• Truphone for iPod Touch (2nd generation) invoked the Truphone Anywhere service allowing calls to be made from iPod Touch to any PSTN number.

Over the course of the past week it has become possible to make low cost international calls from any iPhone or iPod Touch mobile device worldwide. Truphone has demonstrated how the underlying service provider can can eliminate the need to have a multitude of individual "carrier-service provider agreements" with the 79 carriers currently offering the iPhone worldwide. Yet carriers still benefit through increased local minutes used to provide the connection to/from Truphone calls. To quote from Ted Wallingford's "Heartburn Chuckle: The telecom industry can blame itself":

The Carriers

The carriers are firms like AT&T, Windstream, Verizon, BT, and so on. Their obsession with the billing unit (the almighty minute) has made them helpless to see the possibilities of a software-rich, application-based global ecosystem. Consequently, the most successful apps to arrive on the carriers’ networks, the ones most embraced by the public, overwhelmingly have one purpose: to steal billable minutes from the carriers. The innovation disappeared and the scrappy new players in the market, the ones with the power to transform the public’s thinking about telecom, instead got stuck doing the same old thing the big telecoms do to put bread on the table: bill minutes. [Author's italics]

For instance, Canadians can now use Truphone for iPhone as their international calling service over Rogers without the need to subscribe to one of Rogers international calling plans but perhaps with an increase in their monthly "local" voice plan minutes. In this case, there is no cost for the actual application and you establish international call credits through a Truphone account. When Rogers' iPhone customers travel to Europe, calling back to North America can be handled at a much lower cost through hotel, cafe and airport WiFi services, such as Boingo or iPass. (True roaming calls from outside the "home country" over a 3G carrier will still be expensive; Andy's post linked here suggests RebelSIM provides a solution.)

It was the second part of this announcement that is most significant. Previously VoIP-enabled services, such as 3's Skypephone, required working with individual carriers to establish the appropriate business and operating agreements. However, in one move, Truphone was able to leverage Apple's relationships with 79 carriers worldwide to bring about commitment free international calling. Apple, through its Application Program has become a disintermediator, facilitating a business model disruption, once again.

As for the iPhone for iPod Touch application; this is why the most successful carriers need to offer both wireless and broadband Internet services. Calls via WiFi access points, including one's broadband Internet service, go over the broadband connection and reduce carriers' needs to build out the capital-intensive wireless network infrastructure, including backhaul.

In a future post, once I've had some more Truphone for iPhone experience, I'll do a comparison of services available over Skype and over Truphone. But one obvious difference: Truphone is about voice conversations only; Skype is about voice and text conversations.

Related Post: Race to Provide Low Cost International Calling Heats Up

Tags: Truphone, iPhone, carriers, voip, Skypephone, iSkoot, international calling, service providers, WiFi

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