CellCarriers fear mobile VoIP planet

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!) [digg=http://digg.com/tech_news/Why_is_T_Mobile_Scared_of_Truphone]

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.