Talking Heads

Skype co-founder Niklas Zennstrom remembers when 3 UK launched a video calling service a few years back. Trouble was there was no one to call, since so few people used such a service.

Times have changed. Only now it is disruptive young companies, including Skype, creating the market.

Most people want to use video chat services to talk with friends and family internationally. When operators launched premium video calling services there was no interoperability between operators and the cost structure was not clear, says Avi Shechter, co-founder and CEO of Fring,  a mobile communication service that allows users to make free video calls, voice calls and live chat to friends on the fring network and to other social networks.

Like Skype, it also offers a pay-per-use service that allows users to call to people outside the network and cheaper rates than those offered by phone companies.

Fring, Skype and another start-up called Tango, have innovated services for the mobile that take advantage of open platforms to deliver video chat services over 3G and wi-fi, creating a consumer experience and cost structure that is quite different from what the operators originally offered.

Mobile Video Takes Off

That is why consumer interest in mobile video is set to increase as Skype video is enabled on more mobile devices, according to UK mobile consultancy CCS Insight.  The consultancy is predicting that the ability to make calls from smartphones to PCs, tablets devices andconnected TVs will reignite interest.

Apple has already unveiled a beta version of its FaceTime service for Mac, but the real catalyst will come from mobile access to Skype video beyond Nokia's N900, says a CCS Insight report. The huge number of Skype users already making video calls  means there is already consumer acceptance of this type of communication.

A Skype branded  implementation that is marketed prominently will kick-start the mobile segment, predicts the report. It would also spur Google to integrate Google Talk into Android more deeply, delivering a  multi-screen experience that encompasses PCs, phones, tablets and TVs.

In December Skype announced that it was buying Qik, a provider of mobile video software and services headquartered in Redwood City, California. Qik, which offers video recording and sharing as well as video chat, is available on over 200 mobile phones running Android, iOS, Symbian, BlackBerry OS and Windows Mobile, and comes preloaded on a wide variety of mobile handsets through partnerships with handset manufacturers and mobile networks.

Fring or Foe?

But Skype is not the only game in town. Since November 2009 – a ull year before the launch of video Skype – Fring users racked up more than 1.5 billion minutes of mobile voice alling last year, says Shechter. Some 77 percent of Fring video callers call different platforms such as iPhone to Android and 64 per cent of global Fring video calls are on 3g/4G.

Fring boasts a network of tens of millions of users and enables video calling between any supported smartphone (including iPhone, Android and Nokia) and across any connection, including 3G, 4G and WiFi.

While some operators see Fring as a foe and block the service, others are starting to consider partnering with the start-up in order to extend their offerings.

The pitch to the operators is that by partnering with Fring they can add premium VoIP and video calling without having to develop the service themselves.

 “In this way they can share in the success we are enjoying with our premium services and sell more data plans and push more consumption,”  says Shechter, who plans to meet with potential mobile operator partners at the Mobile World Congress in Barcelona Feb. 14 to 17.

Industry Trend

Partnerships between traditional mobile operators and young Internet communications companies are becoming an industry trend. At the 2010 Mobile World Congress in Barcelona, Verizon Wireless and Skype announced a strategic relationship, which allowed Verizon Wireless’ smartphone customers with data plans to use Skype mobile. Another example isTelefónica’s 2009 purchase of internet telephony company JaJah, in a $207 million all-cash deal, which enabled the Spanish operator it to expand its offers to include communications services to online customers.

This story appeared in a print publication Informilo produced in partnership with Raconteur Media, which was distributed at The Mobile World Congress in Barcelona February 14-17 and in a regular issue of the Times in the UK. The print publication is the second in a series  on innovation and technology that Informilo and Raconteur Media have produced.

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