Are We Getting Closer to an All-VoIP Mobile Phone?

When it comes to mobile, time is literally money. Carriers like AT&T, Verizon Wireless, T-Mobile and the rest make us pay based on how many minutes we use — or in the case of prepaid plans, expect to use. If we want to talk more, we can expect to pay more.

But VoIP over 3G networks could drastically change that. Callers could place calls for little or no fee with VoIP apps and in the process, opt for less expensive plans with less minutes. Admittedly, carriers aren’t too keen on the idea. But it’s quickly becoming a topic of much debate. And some folks believe it’s the next logical step in mobile communication.

The 3 Skypephone

Skype’s Fight

Skype certainly does. Russ Shaw, a Skype VP and head of its mobile business unit, told me last week that not only is the company actively working towards delivering its mobile VoIP solution on multiple networks around the world, it believes it can achieve that goal sooner rather than later. “We are starting to see a softening in carriers in relationship to VoIP,” he said.

But according to Shaw, certain carriers have told Skype that the only way they’ll enable VoIP over 3G is by charging for it, an approach the company believes will hamper its adoption. Skype wants carriers to see the value of free VoIP over 3G. And it thinks the experience of 3, a small 3G wireless operator in the UK that — working in conjunction with Skype— has allowed its users to place VoIP calls over 3G, will help convince them of it.

According to a case study performed late last year by CCS Insight Consulting, Mobile Skype users generate 60 percent more voice revenue for 3 than non-users. Mobile Skype users were also found to text message others almost 33 percent more than non-users. Perhaps most importantly for carriers that are trying to drive revenue through 3G, Mobile Skype users are twice as likely as non-users to pay for data.

Apple’s Apprehension

Evidently, some carriers are taking notice. Back in October, AT&T said that it would open its 3G network to VoIP providers on the iPhone. It was good news for Skype given that, according to Shaw, the company’s mobile app has been downloaded more than 10 million times in Apple’s App Store, making the software the leader in VoIP on the iPhone. There’s just one problem: Apple has yet to approve the VoIP-over-3G functionality.

That might be due to quality. According to Karl Good, Truphone’s director of applications, that’s his company’s biggest problem with it. “Although it is technically possible to offer VoIP calling over 3G on devices such as the Android, the relatively low bandwidth of 3G compared to Wi-Fi means that those calls are very often of a poor quality,” he said.

An industry insider I spoke with that asked to remain anonymous echoed that sentiment, saying: “In areas where multiple carriers have 3G deployed, the quality of available bandwidth still has a lot to be desired. Bottom line, depending on where you are, and what carrier you are using, it’s hard to say exactly what you can expect to get.”

All of which, of course, fails to mention that 3G connectivity is lacking in several areas around the country, on every carrier network. And the chances of that changing anytime soon are slim.

Are We There Yet?

So where do we stand? On one hand, VoIP providers are espousing the benefits of VoIP over a 3G network, saying it’s what customers really want. On the other hand, few carriers have loosened their grips on their networks, and many handset makers are cognizant of the fact that so far, VoIP over 3G loses much of its allure once due to quality issues.

Simply put, for now, it doesn’t seem that VoIP is ready for 3G. Or perhaps 3G just isn’t ready for VoIP.