Skype’s mobile dilemma
A guest column by Jahangir Raina of iLocus, a research company focused on emerging communications segments. See also JR's interview today with Mark Jacobstein, CEO, iSkoot.
Skype’s recent mobile VoIP announcement is an admission that VoIP over 3G is not practical yet. 
This is evident from the fact that Skype has chosen to implement iSkoot type architecture for its own mobile VoIP offering that it announced last week.
Skype has tried on several occasions before to go direct to consumers with mobile VoIP. As an industry observer I have always wondered why the company has struggled with the service. I thought iSkoot would be an interim solution till Skype sorted out the problems. Apparently that was not to be. Skype has partially divorced the data channel and will be using the circuit switched network for last mile for the transportation of voice. This is what iSkoot enabled Skype to do. The only difference is that iSkoot has previously proven to be a workable solution while Skype itself had trouble with theirs.
It is very difficult to do mobile VoIP in an operator environment. iSkoot has 60 engineers in Israel who have been working on this problem for two years. That is why Skype chose to partner in the first instance.
So why has Skype struggled with mobile VoIP? The real issue is that 3G data networks are not designed to carry voice. You have enormous amount of overhead associated with packetizing your data and all the echo cancellation, error correction, and other aspects associated with making voice successful. 3G networks are not built for that. When you move over to 4G networks you have a lot of access bandwidth and you can make it work. But 4G is at least 4 or 5 years away from today.
Skype on my laptop is a great experience because I have a super high powered CPU and tonnes of memory on my machine and I can run the client fast. In addition to that I have a high speed broadband connection so I can deliver low bandwidth application like Skype with great experience. But a 3G environment has none of that. In the mobile world the combination of slow processing handsets and bandwidth constraints on data networks are just not allowing VoIP to happen.
3G data network architecture is not conducive for VoIP. That is the case with fixed IP networks as well. They were not designed for realtime voice either. The reason fixed line VoIP works is because the service providers are throwing bandwidth at the problem and letting the shared transport increase the probability of unhindered voice transmission. Fixed line VoIP today is a statistical possibility because fixed IP bandwidth in the last mile as well as in the backbone is sufficient. On the wireless data networks this is not the case. We do not have a sufficient amount of combined average backbone-lastmile bandwidth available to make VoIP over 3G a reality at this stage. VoIP over 3G is not a statistical possibility yet.
The only mobile handsets on which you can try full VoIP over data (i.e. signaling as well as media transmission over data channel) from Skype include a couple of WiFi phones and the Nokia Internet Tablet. WiFi does not have bandwidth issues. With regard to the Nokia device, incidentally that is the only Wimax device Skype has announced support for. That tells you something. That tells you that Skype – like other sensible people out there –are `before they unleash their true mobile VoIP colours. Either that, or they will wait for the bandwidth to get better on 3G networks. It is relevant to mention here that one of the reasons Skype became successful 5 years back was because its timing was painfully perfect. It came along when there was ubiquity of broadband access and plenty of left over bandwidth from the pre-downturn boom time.
That is a critical factor in Skype’s mobile VoIP ambitions. The timing has to be right. So what does Skype do in the interim? The challenge for Skype in the interim is to keep the brand name kicking in the mobile VoIP circles till 4G becomes ubiquitous. If you understand those concerns, all that Skype has done so far in mobile VoIP starts to make sense. The Skypephone, the bridged VoIP model, only the Wimax/WiFi handsets for full VoIP over data etc. Skypephone is a brand exercise. Bridge VoIP technology that iSkoot brings in – and the one Skype itself is now promoting – is able to maintain the voice quality which is important because the last thing Skype needs is to be remembered for lousy voice quality on mobiles.
Market favours those who bring the right technology at the right time. But certain players evolve with the market, they grow with the market, they solve problems as they face them, and when the time arrives they have a better overview of how to handle things and deliver. So Skype has a dilemma here: Offer full VoIP over data and be remembered for lousy voice quality or wait for 4G and possibly be left out. Just because a peer-to-peer application worked well on fixed broadband does not necessarily mean it works well on the wireless networks. It is tough to maintain voice quality over wireless networks. With a packet switched technology the problem is compounded. So even though you throw bandwidth at the problem when 4G arrives, there are likely to be other folks around who might do a better job at getting the quality right just because their product has evolved along with the evolution to 4G.
The other issue is that if Skype is bringing in its own technology for direct-to-consumer mobile VoIP, as opposed to licensing it from companies like iSkoot, this strategy falls completely out of the scope which Skype has defined for itself till now. Until now, we have not seen Skype develop something for a legacy network. All internal development has been around IP networks. The version of bridged mobile VoIP that Skype is enabling with its direct-to-consumer offering involves bridging of MSISDN and IMSI numbers of a mobile phone user. It lets a user use the same phone number over GSM and data channels and involves legacy protocols and stuff. SkypeOut does indeed involve breakout into the PSTN but Skype client hands off the call in IP format. It is the terminating gateway that converts IP into TDM for breakout into PSTN. So what I am trying to emphasize is that this is the first time Skype has been drawn in the legacy networks mess.
There have been internal pressures at eBay to ramp up the monetization of Skype. I think the entry into legacy domain is due to that pressure. The implications are that this pushes Skype into traditional telecom domain somewhat.
The MSISDN-IMSI mapping technology, apart from being a complex piece of technology, is not easy to integrate with the MNO’s OSS/BSS set up. There are billing nightmares involved. So if Skype has the whole package in place, we could see it offering the solution to MNOs bypassing iSkoot. That to me has shades of legacy wholesale model. Skype would not be Skype anymore. In fact that could be one of the reasons why iSkoot is about to push its own direct-to-consumer offering now. On the other hand Skype has to consider possible competitive offerings of wholesale bridged VoIP coming from the likes of Yahoo and Google/Gtalk since iSkoot type companies can easily extend a similar partnership model with those outfits. iSkoots and EQOs are compatible with those clients too.
In conclusion, Skype’s entry into direct-to-consumer bridged mobile VoIP is due to three main reasons: (1) its concern to keep its brand name relevant and known in mobile VoIP till 4G comes along or till 3G connections improve worldwide, (2) pressure from eBay to further monetize the mobile capability even if that means trifling with legacy networking technology, (3) its apprehensions that Gtalks and Yahoos of the world could strike VoIP deals with MNOs or do something similar with iSkoots and EQOs.
This is all pressure talking. Ideally we would want Skype to run the same way it runs on our laptops even if that means we have to wait a little longer. Think of the stuff that Skype could cook in absence of pressure. HD voice on 4G would be great.
