Thursday, 7 February 2013

The VoIP War is On

Over the past couple of years, VoIP applications have exploded in popularity as a response to carriers charging over-expensive rates, especially for international calls, and mobile users being tired of feeling ripped-off any time they make a call overseas or turn their phone on while traveling abroad (roaming).

With the fast growth of smartphones, led by the iOS and Android platforms, as well as the concept of Apps that revolutionized the way mobile users get access to new services and communicate with each other, it is natural to see new Apps flourishing on the market to specifically address the demand for lower costs of communications, whether voice or text.

Skype pioneered the VoIP market and has been very successful, attracting hundreds of millions of users and establishing a strong brand for free calling between Skype users. The mobile Apps took it a step further adding mobility to the formula, allowing people to make free calls from their mobiles, on the go.

There is no doubt that Skype is still one of the most popular Apps on the Apple app store, but in recent years, it has been joined by other popular Apps such as Fring, Viber and Line, also allowing two users of the same App to make free calls to each other.  

A similar trend for free texting or chat saw the rise of successful Apps such as WhatsApp, weChat, Oovoo, and Line, letting users of the same App text, chat or IM each other for free, from their mobiles.

There is an obvious limitation of all these applications of course and it is the fact that they are limited to people within the same circle, communicating with each other. In other words, people using an App x talking or texting to people using the same App x.

But what happens when you need to call someone on a fixed landline, a home, an office, a bank?

And what about calling non-smartphone users or people you do not know, people who are not in your contact list?

And what about calling your family back home on their old basic phone?

With several billions of mobile phone and fixed line users out there (who are not on Viber, Line, Skype, WhatsApp, weChat and so on), being able to call normal phones either locally or overseas is still a heavy need for mobile users.

This need was originally answered by prepaid calling cards, which gave migrant communities a cheap way to make international calls, at the cost of a very inconvenient process of typing long sequences of digits, # and * keys.

Beating the network operators on price for international calls is relatively easy as they are so way out of the reasonable range, charging sometimes several Euros per minute for an international call.

But as the discounted calls market emerged, so did VoIP services, and "the VoIP war" officially started between various providers such as Skype, Google Voice, Footalk, Vonage, Rebtel, Truphone, Jajah and many others, all battling for offering cheaper calling rates to end users.

A new calling App launched in 2013 is taking that price drop even a step further and is about to steal the show by providing extremely competitive rates (4 to 5 times cheaper than SkypeOut on some destinations). 

The app is called Yelo and it offers iPhone, iPad and Android users, cheaper international calls with crystal clear call quality.

Unlike many other services, Yelo does not require the interlocutor to own a smartphone, or have any Apps installed, as it allows users to call any phone, including basic handsets and landlines to over 200 countries. Yelo works over Wifi and 3G or 4G and is available to iOS users and Android users. A version for Blackberry 10 is also being rolled out soon. (visit for details)

Since its launch, Yelo has made some noise and is growing very fast, making Yelo a serious contender for winning the lowest price battle for international calls, allowing its users to call France, Germany, China, Hong Kong, Singapore, India, Bangladesh, UK, USA, Moldova, Romania, Russia and 200 other countries at discounted rates starting at less than 1 cent per minute.

Calls to mobiles especially become extremely interesting with Yelo. As an example, the 2.5 million French people living outside of France can call their friends and family on their mobiles in France for just 4ct/min (versus 16.9ct/min with SkypeOut for the same call).

Because Yelo is not relying solely on VoIP technology, it is able to provide a call quality similar to that offered by the carrier themselves, giving a good long-distance calling experience to its users, who can now call across the globe and enjoy a call quality as good as, if not better than, the same call dialed directly via the operator, but at a fraction of the price.

Generally speaking, call quality has not always been the best selling point for VoIP calls providers, as voice calls across the globe via VoIP have been a rather inconsistent experience for the user. This inconsistency in quality has several causes, the VoIP technology itself is probably one of them, and another one is perhaps that VoIP calls still depend heavily on the mood of the giant telecom operators, who frown upon VoIP and sometimes use “sabotage” tactics on the transfer of voice data to worsen the quality of a VoIP call, leaving the user think that the VoIP provider is responsible for the bad quality of the call. This was one of the early tactics used to try to kill Skype’s fast growing popularity in the early days.

While completely unethical, as well as illegal, it is understandable that operators panicked when they saw that VoIP was beginning to seriously eat up on their revenues. 

And to make things worse, when more savvy users make calls over wifi, it hurts the operator’s bottom line ever more as users practically make calls without even touching their phone bill.

But VoIP and low cost calling is now a reality and a maturing market that operators need to count with.

"If you can't beat them, join them", as they say, so operators start to see partnership opportunities with VoIP services and some start to even roll out their own VoIP services, as recently did Etisalat in the UAE launching a VoIP service called Five (VoIP calling card).