Mobile VoIP making serious inroads

It was predicted years ago, but it took some time to materialize, but Business Week is confirming that the trend of nearly free international telephony is becoming real.


Gorilla, iCall, and a growing number of other services rely on what’s known as Voice over Internet Protocol technology that delivers speech via the Internet in much the same way as e-mail. VoIP calling is already raising a ruckus in telecommunications, putting pressure on the price of land-line calling and luring subscribers toward upstarts like Vonage (VG) and Comcast (CMCSA) away from incumbents such as AT&T, and Verizon (VZ). Now, the technology threatens to erode sales for mobile-phone service providers too.

By 2011 the number of mobile VoIP users around the world may rise to 100 million from 7 million in 2007, according to ON World, a consulting firm based in San Diego. ON World estimates that in 2011, mobile VoIP voice services may generate $33.7 billion, up from $516 million in 2006, the most recent year for which the figure is available. If that sounds like a breakneck pace, consider the growth trajectory for Jajah, a provider of wireless VoIP, which had 10 million users in April—a fivefold increase in just a year.

Wireless carriers are expected to generate $700.7 billion in sales of voice services this year, according to consulting firm Ovum. Still, carriers in the fiercely competitive mobile-phone industry will be none too pleased with newcomers snapping up a portion of the almost one-quarter of all wireless minutes now devoted to long-distance and international calls. Insight Research estimates that together, international and long distance will make up 24% of the 1.2 billion wireless minutes used this year.

VoIP technology is likely to make deeper wireless inroads soon. Skype, the eBay (EBAY)-owned service used by more than 338 million people to make free PC-to-PC calls, later this year plans to release a new product called “Skype for your mobile” that will let customers use local wireless minutes to make international calls.”

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