Why is T-Mobile UK blocking calls to mobile VoIP start-up Truphone?
Mobile carriers are scared of one thing: becoming dumb pipes whose only utility is to carry voice and text. And it is one of the reasons why they are fighting tooth and nail with the mobile VoIP providers, using all sorts of tactics to make mobile VoIP a non-starter. (See video below the fold!)
The company bearing the brunt of this scorched-earth policy is Truphone, a UK-based start-up that has developed a mobile VoIP client that makes it easy to make cheap calls (cheaper than mobile minutes that is) over dual mode phone, like Nokia N95 and Nokia E-Series phones. Once again, the company finds itself in the cross hairs of a behemoth that wishes to see Truphone go away.
T-Mobile UK is refusing to interconnect with mobile VoIP provider Truphone. T-Mobile customers making a call to Truphone’s number range (07978 8xxxxx) will not be connected. T-Mobile told Truphone, that as a result of a policy decision, they don’t connect to VoIP-based low cost calling services.
T-Mobile UK’s decision to block Truphone might have come as a response to the new and radically better Truphone 3.0 client that allows you to send Free SMS messages and allows VoIP calls over 3G. According to M:Metrics, nearly 86% of UK mobile users are heavy SMS users, and that means it is a cash cow that carriers like T-Mobile can’t afford to be slaughtered by IP-based SMS services. (Jesse Kopelman had discussed the impact of Mobile VoIP in his excellent post here.)
On the issue of Voice calls, Truphone CEO James Tagg says, “This affects every new entrant into mobile telecommunications because the only company that can facilitate interconnection with T-Mobile is T-Mobile. It amounts to T-Mobile being able to veto a new entrant into the market. This would put telephony back 100 years, to a time when interconnections were not assured.”
T-Mobile is offering to pay Truphone 0.21 pennies per minute, even though it charges its customers 35p per minute. Truphone claims that its call termination costs are 9p a minute. “T-Mobile is blocking our numbers unless we accept this loss-making offer and, since T-Mobile is the only company that can route calls from its customers it has a complete veto on the Truphone service,” Tagg says.
This is not the first time Tagg is fighting the big guys. A few months ago, the company got into trouble with Orange and Vodafone, which had prevented Truphone from working on devices that carried their own version of the operating system.
Since then, Vodafone has introduced a new policy which makes it more expensive to use data plans for anything other than browsing and email, a move that is designed to blunt the uptake of Mobile VoIP, especially over fast 3G connections.Fighting the incumbents is not the only challenge Truphone faces –Vonage and countless other VoIP providers have learnt the hard way that fighting the cheap minutes battle is an unviable strategy in the long term.
Truphone appear to have more problems than other operators. I hear that none of the other VOIP service providers have these issues. Truphone customers don’t seem to be able to make calls if their network operator is Vodafone, Orange and now T-Mobile.
I’ve said it before, and I’ll say it again. Voice is special in the sense that convincing people it costs per minute to provide is one of the greatest scams in history. Joe Nacchio, former CEO of Qwest, famously boasted that “Long Distance is still the most profitable business in America, next to importing illegal cocaine”. His choice of peer group is telling… Then again, he is now a convicted felon, so not so surprising after all.
How much longer the price for voice can defy gravity is another question. Telcos are just trying to milk the cash cow for all it’s worth while the going is good, and postpone the inevitable with the usual lobbying tactics. A couple of weeks I met with a former colleague of mine who is now responsible for fixed and mobile services architecture at France Telecom, his constant worry is Skype.
Carriers will never support applications that threaten their own revenue, hence this development is reasonable.
Their offer to Truphone is somewhat puzzling though.
If you have a T-Mobile data plan, there shouldn’t be a problem. Things have changed… voice is data now.
@Jack Wishart: One of the significant things about this is that T-Mobile’s action DOES affect other VoIP providers. We’d name them, but we don’t have their permission to do so. The Orange and Vodafone issue affects only their branded Nokia N95 handsets.
“You hear?” Make sure you’re listening to the right people.
The flip side of this is that Mobile VoIP is exactly how WiMAX can beat 3G. While 3G carriers worry about protecting legacy voice and SMS revenue, hungry WiMAX operators can come in and eat their lunch by being dumb pipes for VoIP and IM. Metered voice and SMS may be a high margin business, but there is too much competition to support profitable new entrants. Taking the initiative and changing the game is a way to build up market share quick and achieve profit via scale — see Amazon, Craig’s List, and eBay as good role models for this.
The issue is not only between carriers and alternate voice providers over their IP network. In fact looking at other type of value added services locked by carriers we can see the same issues when it comes to old voice related services. Take for example 411, very few people know why they are still charged for getting someone’s number when you can do it for free on the net. 411 is provided a 3rd party supplying the carriers. They are now more companies competing for directory assistance because carriers can not impose one service and hide their supplier hostage without access to the a broader market.
So in France, since you are mentioning Orange earlier in this thread, after some litigations the carriers had to abandon offering the 411 service directly and when you dial the 411 short number you now end up listening to a carrier sponsor message asking you to find a provider on your own :->
411 services such as 118 112 are competing in the market place supported by bloated advertising campaigns to fight for the directory information business which is very very profitable.
Amusingly enough 411 services can’t really provide you any cell phone number, mostly landlines.
@ Jesse Kopelman,
You made a number of really good points. This said, wouldn’t you create the chicken and egg problem of mobile VOIP (service and phones) versus WIMAX deployment?
Thanks in advance for your response to this question.
Om, I have some more details about Vodafone’s data pricing for VOIP on my blog : http://leavingthedayjob.blogspot.com/2007/06/does-anyone-at-vodafone-understand.html
Truphone is just too famous. That’s why T-Mobile picked them. Other VoIP providers can do the same job and have similar prices. T-Mobile can’t block them all. The installation on the new Nokia phones is quite easy.
All Truephone are doing is crying about the fact that can’t get free access to the mobile networks, its common sense, why would they allow a new entrant unlimited access to something they spent billions of pounds on. Surely Truephone with the $28million of venture capital should manufacture their own phones and deliver their own software, it’s not setting the Industry back, if people look at the true VoiP mobile Innovators, they would start to see a massive market, it’s about service and innovation not a bunch of geeks trying to steal money from the Industry and create a bad felling within the market.
All Truephone are doing is making bad press for the opportunity of innovation and trying to flex their VC money, hopefully they the VC will pull out and invest in coffee or gold, they have a better chance of a return.
Think this may have something to do with Tmobile’s investment in their competitor Jajah? I think so.
Curtis, I’m not sure I see a chicken and egg problem. In terms of the infrastructure and terminal devices; these are in development or production from a multitude of vendors. In terms of the services, these already exist from the likes of Skype, AOL, and many more. Going beyond just VoIP or text messaging, you have all sorts of compelling Internet services. The idea is that the WiMAX providers are just a dumb pipe serving up The Real Internet (so wonderfully depicted in the iPhone commercials). Contrary to the hype, being a dumb pipe provider can actually be quite profitable. Meanwhile, as the recent travails of Sprint (not to mention the flare outs of AT&T Wireless and Alltel and the bankruptcy of Leap) have show, trying to be a service provider on top op a network operator, in a competitive environment, can be a bit hit or miss.
Well, you are half-right — these Wimax companies will be hungry. Clearwire’s IPO sank like a stone.
Who is going to fund these wimax start-ups billions of dollars to buy the spectrum and build thousands of network towers? I really like to see the prospectus on these wimax start-ups. Please buy our IPO shares at internet bubble EPS multiple. We are going to spend billions of dollars on building a national wimax network as a dumb data pipe so that the next internet billionaire start-up like Google can really make money.
Clearly, there is consumer demand for fast, reliable mobile connections to “the real Internet” for applications like Google, VoIP & social networking.
Equally clearly, it is a technical & commercial challenge to provide good-quality mobile “pipes” of this type (actually smart pipes, not dumb pipes).
Nevertheless, very few operators have optimised their technology choices & product/marketing strategies to get as close to that ideal as possible, while still making a margin. Most still insist on layering on over-engineered inhouse services, and squandering huge amounts on customer acquisition & retention.
Fortunately, competitive pressures are increasing with the continued release of new spectrum, plus WiMAX launches, possible regulation of data tariffs, greater competition, wider use of WiFi, MVNOs, availability of unlocked phones and so on.
I suspect we’ll get a chance to witness a “fair fight” quite soon, between traditional ‘premium’ wireless network+service providers, vs. “smart pipe” network-only + non-optimised Internet apps combinations.
The outcome will probably be a mix of both models, but with lower prices & forced innovation in customer experience, on both sides.
Two very simple comments.
You cannot ‘disrupt’ the very service/company that is providing the medium on which your own service is traveling. Carriers getting minimum fees, while the voice traffic goes all to VoIP providers? Unlikely. Two things could happen – the carriers would become VoIP providers for their “rogue” costumers, but still keeping the lower revenue indoors (see T-Mobile & Jajah), and/or they could lower their prices, offer flat-fee plans, to effectively kill the interest in VoIP.
WiMAX will not become a big disruptor of traditional cellcos – why? There isn’t a rock-solid standard. Mobile phones now have quad-band capabilities, making them very good at roaming around the world’s networks, but with WiMAX, we are seeing even proprietary solutions being developed by some operators. Different frequency spectrums in different countries will also make life very difficult. How long would it take for a network to be as good as a cell network? Because until then, there may be little reason for people to carry two phones around with them, or for manufacturers to even make them.
@Tim, Truphone
I don’t believe that any other VOIP service providers are having this problem. It seems to be only Truphone. It is a bit suspicious that you can’t name any.
I will name at least 2 VOIP service providers that I regularly use on these networks and don’t have any problems, WiFiMobile and Fring.
The real problem is that Truphone expect the operators to ship their phones with the Truphone software so that their customers can use the Truphone network. This is entirely unreasonable and will never happen. It would be like saying Sky have to ship their set-top boxes pre-configured for the Virgin Media network.
Presumably the other VOIP service providers are selling a product and not hoping that the mobile operators will supply it for free as Truphone are.
@Jack Wishart
For various reasons depending on how the number ranges are derived, T-Mobile cannot, even if they want to, prevent calls going to all VoIP providers. Referring only to publically available information however: download the BT wholesale interconnect tariffs from http://www.btwholesale.com/content/binaries/service_and_support/pricing_information/carrier_price_list/downloadable_carrier_price_list/b112_11.zip
(“NCC CPL 1_12 (DTM)version39.csv” in the zip file). Try to dial anyone on an “FW” tariff from T-Mobile UK and see how far you get 🙂
Truphone do not expect the operators to ship the phones with Truphone-specific software. On the other hand we do not expect them to disable in-built generic VoIP capabilities of the phones any more than we would expect them to remove, for example, the generic IM capability.
@Jack Wishart: Jack, check your facts. Truphone doesn’t ship on any handsets; to download it or not, after handset acquisition, is a choice the consumer is entirely free to make.
Do you honestly think it’s right that, in this day and age, any network should be able to choose for its customers which phone numbers they are permitted to call? The numbers affected are, in every respect, normal mobile numbers, just not belonging to a GSM mobile operator.
Perhaps you should also reflect on the fact that a Truphone user CAN call a T-Mobile number. What T-Mobile has done is block its OWN customers from calling Truphone.
I believe that this is one of the problems. To connect to the Truphone network the phone has to ship with a piece of software ( albeit written by Nokia ). And as you say the network operators are not shipping the phones with Truphone capability.
I think it wrong that callers can be conned into paying a lot of money for a call thinking that they are calling a true mobile phone when in fact they will only get connected if the person they called is in a Wi-Fi zone. They clearly will waste a lot of their money on voicemail. I think it is right for the mobile operators to protect the public against this.
As I said, I use both WiFiMobile and Fring without any problems. Incoming calls go to my GSM number. I don’t want yet another mobile number to confuse my friends with.
@ Roland
You say that the mobile phones have “inbuilt generic voip capabilities”. This is not the case. These capabilities are not available from operators in the USA or many other countries.
I agree with Jack, how can Truphone expect to piggy back off Nokias software that T-Mobile and all the carriers are effectively buying from them, with the phone, and then reselling it to their customers. Why how can you say it is not reasonable for them not to want to buy software that only ends up screwing them?
Sheryl
@ Jack
Is that really the case with the Truphone number? I have to admit that sounded like a good idea when I heard of it, but the chances of actually getting a connection when someone calls it has to be pretty slim.
@Jack Wishart
is not fully informed. While Truphone is a service provider, its main thrust is simplifying the administration of SIP calling on the new Nokia phones. A geek could do exactly the same thing with any arbitrary voip service. Truphone happens to be the nail that is sticking up right now that Tmo chose to pound down. Fring is not a service provider; they are like the software side of Truphone. To use Fring one must bring along their own voip service.
Bang on, Om! I have personally spoken with numerous MNOs around the world that clearly state their position. Its a non-starter. I can not believe the amount of VC money going into the mobile VoIP space. It will all be for nothing. Those start-ups best think of another business to be in.
JT
Aren’t the mobile companies already routing all calls using VOIP?
In fact, a very large VOIP company in Canada was just purchased by a US mobile phone company. Perhaps they were afraid that the same sort of thing may happen.
This is an interesting thread although as a non techie person some of it is above my head. Perhaps someone could clarify?
I have a Vodafone N95 and read previously that both Vodafone and Orange removed the VOIP capability from this. This being the case why am i able to use the other 2 providers named here Wifimobile and Fring but not Truphone? Sorry if it’s a silly question but i must be missing something.
Reference the comments from JT i hold my hands up to all the start ups in mobile VOIP. This is going to be huge over the next couple of years and the Network Operators will have no choice but to embrace it.
@ Jack Wishart
I’d like to clarify one thing: It is quite feasible to hand out a Truphone number as your only number. If you are not available directly on WiFI (or 3G or EDGE) then the call is automatically forwarded to GSM.
Also the phones (N95 and E-series) have generic SIP VoIP capabilities in firmware, in exactly the same way they have GSM capabilities. Those operators who choose to ship their phones without this have merely turned off the menus that allow you to access it.
The operators that disable VoIP (and indeed those that disable the whole of WiFi in the US) do indeed make the same argument as Sheryl; we’ll have to see if the regulators and competition authorities agree. Meanwhile let’s hope that consumers vote with their feet and buy from operators that are more open minded.
Finally, the reason that Fring and WiFiMobile work on the handset is that they are standalone applications that do not use the Nokia VoIP capabilities; the penalty you pay for this is typically poor battery life as the application is less well integrated into the radio subsystem.
comment from digg.
“It is because you can beat the system. It is awesome I do it all the time, it saves me a ton of money. Basically the way I have it setup is I use http://www.voicestick.com and tmobiles fav 5 plan. I tell tmobile that I want voicestick as one of my favorite numbers and then I set up the i2bridge with voicestick so that every time I call from my cell phone it just gives me a dial tone. This way all of my calls are free to voicestick. I never have to worry about going over my minutes or anything like that. It is great!”
@ Rob Emmerson
| I have a Vodafone N95 and read previously that | both Vodafone and Orange removed the VOIP
| capability from this. This being the case why
| am i able to use the other 2 providers named
| here Wifimobile and Fring but not Truphone?
Yes – they adapt the firmware but according to allaboutsymbian.com forums you can reflash the phone with standard firmware and restore mobile VoIP capability.
| Reference the comments from JT i hold my hands
| up to all the start ups in mobile VOIP. This is
| going to be huge over the next couple of years
| and the Network Operators will have no choice
| but to embrace it.
Another alternative in the UK is aql’s mobile VoIP service. They will auto-configure your Nokia (check http://aql.com/telecoms) without requiring you to download or install anything on your phone. Just send ‘nokia’ to 64446 and get an auto-configuration message back.
Or… you could use aql instead on your E-Series or N95 handset, who’s numbers aren’t blocked by T-Mobile.
Just text NOKIA to 64446 and you’ll get a configuration message back immediately. Once you’ve told the phone which access point to use you use it immediately and without any software to install.
You also don’t have to have an 07xxx number, which people will be unsure how much it costs to call – you can have a UK geographic number in the city of your choice for £2/month.
With regards to concerns over battery life – Yeigo, which also uses 3g or Wifi, uses even less bandwidth (less than 5mb an hour),effectively giving you longer battery life while saving you money too.
Win win as far as I’m concerned – check them out: http://www.yeigo.com
Just out of interest, what is a radio subsystem?
An eerie vision of the future without Net Neutrality:
I don’t know if there’s a Net Neutrality movement in Europe, but the video is proof they need one.
Essentially the whole area of FMC and wVoIP completely breaks the European termination fee regime.
The general assumption that call to 07xxx Mobile Number = Termination on Expensive Mobile Network is now invalid.
Calls to any number – fixed, mobile, VoIP or a Skype or other ID – now might actually terminate on a cellphone, fixed phone, or other device, via VoWLAN, VoIPo3G, circuit, high-quality circuit, voicemail server or perhaps be forked to 2 or more of these.
Some solutions are possible –
a) Biller keeps all the money, but they have to interconnect everywhere to keep their customers happy
b) Because mobile numbers are more “valuable” than fixed numbers (people tend to put them in their phonebooks first, plus they assume they can receive SMS etc), charge the operator for each 07x number issued.
Blocking Truphone is like trying to cut all of Hydra’s heads. It’s not only Truphone which is offering VoIP over 3G and over Wifi. It’s also Fring, Wifimobile, Mobiboo, Yeigo, aql and thousands of other companies worldwide. In fact every SIP based VoIP provider can do a quite similar job like Truphone. It makes no difference if you install your SIP login data into a mobile phone or an ATA or a soft phone.
This could be a good thing for consumers. The public seem to have heard about Truphone more than anyone else and probably haven’t tried any other services. The reality is that Truphone is NOT the best mobile VOiP service available. All their software does is configure Nokias SIP client, which is a terrible business and as I see it they don’t actually have a product.
The competition IS heating up! perhaps, the mobile industry needs to learn from other industries and embrace new technologies – sometimes the smartest strategy is to eat your lunch than have none left….
However, T-Mobile’s fears could almost be understandable. How else are they going to meet their performance projections? 😉 Rebtel’s CEO Hjalmar Windbladh explained that Vodafone’s annual revenue increases can be attributed to customers not using their inclusive minutes offered with their phone contracts. Read the full story on http://blog.rebtel.com/ Perhaps, they want to protect their investment in Jajah?
Personally, the troubles between T-Mobile and Truphone are indicative of old phone company mentality. However, the real discussion is why trouble yourself, there already exists a solution for long distance calls – the real solution is http://www.rebtel.com
There’s a fair bit of misinformation around this, T-mobile UK have call plans for PAYG customers that are 12p/minute not the 35p claimed by Truphone, then there’s the inclusive calls on pay monthly tariffs etc which are at lower effective rates.
With WiMax u can bypass the Telco n lauch your own Telco based on WiMax services:)
So here comes WiMax. Be interesting to see how the telco’s respond?
Great article and discussion, but to all of the people who seem to misunderstand the article, please re-read it.
The problem is NOT T-mobile blocking the use of the VOIP client on their network, but rather refusing to terminate regular cellular calls TO a block of UK numbers recently assigned to Truphone.
This is NOTHING to do with data plans. We’re talking regular GSM cellular calls on the T-mobile side.
It’s akin to, say, T-mobile refusing to connect calls to Virgin Mobile subscribers. It’s just punitive.
Six months later and still nothing from a large carrier in the mVoIP space. Interesting, though, that most of the users of mVoIP are happy. Check out http://www.mobilevoipreview.com for user generated reviews.
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