Google Voice a Threat to Mobile Operators. We Mean it This Time.

How many times have we heard this? “A new technology that is starting to gain acceptance signals the death knell of the incumbent telecommunication operators.” Let’s see. What was that technology again?

Wi-Fi.

Skype.

Vonage.

WiMAX.

And on and on and on. Now, in the article CNN Money by David Goldman, Google: Your Next Phone Carrier  breathlessly predicts Google will become a mobile operator by using its voice over IP application. Based on what evidence? The article cites the fact that Google might be buying dark fiber, might become an ISP and once bid on some wireless spectrum. But the key information is here:

“Google already allows people to bypass their mobile carrier's service. Google Voice lets customers send free text messages, and the new version of Android ("Gingerbread") supports VoIP Internet calling, allowing users to make calls over over Wi-Fi networks.”

Wow! It’s wireless Skype all over again, which has had exactly zero effect on the mobile operators. And hasn’t really cut the legs out from under the wireline companies, either.  And, really, all this talk ignores some of the most important facts out there: 

• Wi-Fi isn’t a wide area network. Isn’t now. Won't ever be. Tried a couple of times and crashed (remember municipal wi-fi networks?”). Even Google’s own experiments in San Francisco have tanked.
• If you’re going to have mobile access, you will have to use a mobile network. 4G doesn’t yet have enough footprint and will end up being controlled by the mobile operators anyway. 
• It’s not easy to build a mobile network. The vaunted Verizon Wireless has achieved its current network coverage after more than 20 years of buildout. AT&T has also had 20 years and Sprint 15. People are still complaining about coverage.

A couple of scenarios:

“I’m going to replace my AT&T/Verizon Wireless/Sprint/T-Mobile with the Google network.” Assuming a deployment twice as fast as those companies were able to accomplish, it would be 2021 before there would be similar coverage. And, as rich as Google is, it still doesn’t have the financial resources of the telcos. Come back in 10 years. Oh, wait. It’ll be at least two years before they can complete the paperwork with the FCC and obtain nationwide spectrum. And all those communities who are already sick of putting up cell towers? They don’t want more. 

“Google Voice will replace the mobile operators because the price is zero.” OK, where are you going to get mobile access? From a mobile operator who is charging you a for a voice plan whether or not you use it. Or you could go with a data-only plan using a 3G/4G dongle for your laptop. Great: 1) you’re still tethered to a laptop, which is tough to use at the bar when you want your buddies to come down and 2) you’re still using AT&T/Verizon Wireless/Sprint/T-Mobile and paying $60 a month… about the same as a basic voice plan.

“I’ll use Google Voice on Wi-Fi.” Great idea. But where? Home, Starbucks, McDonalds, home, someone else’s home and… where else? Wi-Fi’s not a mobile network (something I’ve been saying since 2003). Terrible coverage. Not useful where you want to make calls.

What it really means: Nothing. Is Google going to become a serious mobile operator using its Android phones, some spectrum somewhere or Wi-Fi? Probably not. Skype didn’t. Vonage didn’t. Once again, Nethead domination of the telecommunication space will remain a fantasy. Bellheads, ultimately will be responsible for paying for, building, and maintaining very complex, very expensive networks. And consumers will keep paying – and paying a lot – for access to those networks.

Video services come to smartphones, and vice-versa. AT&T U-Verse on Windows Phone 7

Now that they are delivering Windows Phone 7 smartphones, AT&T has decided to include their U-Verse application, which is already available on Android and BlackBerry phones (U-Verse is AT&T's home video service that delivers tv programming over a broadband connection.)

If I look through the press release for the exciting parts, it seems to be two-fold: First, Windows Phone 7 users can get U-Verse applications even if they're not current U-Verse customers.  Second, you can use it for an entire month at no charge! After that, it's 10 bucks a month for non-subscribers and U-Verse customers who pay more than $80/month get it for free.

So what does the U-Verse mobile application do, exactly?  I'm sure it makes a lot of sense when you're using it, but it's kind of hard to describe.

• Program the digital video recorder remotely to record new programs or delete recorded shows
• View the channel guide and program descriptions
• Download and view popular TV programs

About that last item... yes, you can download TV programs to your Windows Phone 7, iPhone, Android or BlackBerry phone... with some limitations.  First of all, it's not the entire U-Verse channel lineup that's available, it's a smattering of popular network shows. And second,  you have to download the shows over Wi-Fi, even though the phone is also connected to AT&T's fast 3G network. After that, you can watch the episode for about two weeks, whereupon it will "expire" and be deleted from your device.

The content is fairly limited, with episodes from about 50 shows from ABC, Disney Channel, ESPN, Disney, Animal Planet, TLC, and Discovery Channel. You can see Grey's Anatomy, Ugly Betty, Desperate Housewives, Cougar Town, Scrubs, Lost plus other shows like Phineas & Ferb, Whale Wars, and Mythbusters.

What does it all mean? What comes through loud and clear is that even the mobile operators are considering TV viewing a routine part of the cellphone experience. Obviously, there are cross-marketing opportunities for AT&T to push U-Verse to mobile users who aren't getting it yet. Plus there's the upsell to existing consumers ("The application is free if you upgrade to the U300 level").

It's vaguely disappointing, though. I'd rather see something like "view every U-Verse channel you have now from any location at any time over any network."

It's not that.

But it's a step in the right direction.

The Other Mobile Video Network

I erroneously left out an important mobile video delivery network not only in my blog posts but in my thinking as well: Wi-Fi.  A recent report from Rhythm New Media (.pdf), a firm that provides mobile video advertising to smartphones, finds that, overall, 53% of video delivered to phones was over the 3G network, with the remainder via Wi-Fi.  It's significant that nearly half the high-bandwidth streaming content does not come over the wide area public networks but, rather over smaller, faster, and (most likely) more reliable systems.

Rhythm New Media also indicates there is a spike in Wi-Fi usage at about 10pm, so I think it's fairly safe to assume people are using these devices at home rather than at coffee shop hotspots.

In some ways, this is almost identical to households having both a cellular and landline telephone.  There's a great deal of value in the convenience in mobility, but there are also times when the lower cost, more reliable, better quality connection is preferable when mobility isn't required

(Yes, yes, I know many people in the mobile world would argue vehemently with the suggestion that landlines are better quality and more reliable than cellular... I wouldn't disagree with them, either. Let's not consider this from the perspective of the mature cellular networks of 2010 but, perhaps, those of 1995, when mobile voice networks were just getting established and traffic was starting to build.  That's probably a better analogy to the heavy data loads on 3G networks today and, from that perspective, the landline vs. cellular analogy makes more sense)

If there's a single message that can be gleaned from Rhythm New Media's data on Wi-Fi it is that consumers prefer a clean, uninterrupted video stream, which today's 3G networks can't necessarily provide at peak hours.  It also suggests consumers know the value of offloading their data traffic from 3G to an alternative, which could also bode well for in-home femtocells.