IP Voice Calling Apps Threaten to Remove all Calling Fees

Imagine a world where all calls are free:  Local, long distance, international – no distinction and no per minute charges. Frankly, it is not too hard to imagine this scenario in light of what the promise of VoIP has provided to date.  Already most mobile and home phone plans include flat rates and/or unlimited calling.  As we all know the Internet data consumption associated with voice calling is miniscule compared with other forms of data consumption and there is no toll hierarchy set up to place artificial boundaries on data (like national borders or PSTN network access).

A crop of new mobile-calling apps is, essentially, trying to MacGyver toll-less calling by allowing mobile phone data users to make calls which are intelligently routed over GSM, mobile data (3G and 4G) and land-based IP networks, allowing for domestic — and critically — international calling at the standard local rates in the terminating jurisdiction.  In contrast to previous calling apps, new ones like Meucci and CallPal purport to make no distinction based on where you are calling – it does not matter if you are calling another user of the same app or any PSTN phone number.  Although these no-pay, hybrid VoIP apps are in their infancy, in some cases do not fully live up to their claims, and are confined to users with mobile phones, they nevertheless promise to further weaken revenues for international telecom services, which accounted for $13.1 billion in 2014 (according the FCC’s latest data), 73% of which was tolls for international calling.

VoIP Calling apps are nothing new; Skype, historically the 800 pound gorilla of consumer VoIP calling, has been present on mobile phones since the early 2010s, as have a number of other applications like Viber and Zoiper which focus specifically on mobile voice.  Now, as WebRTC dramatically expands the end-points from which voice can be reliably provisioned over IP networks, many browser- and mobile-based chatting applications like WhatsApp and Facebook Messenger have incorporated voice tools into their offerings.  Although these applications vary dramatically in terms of how they approach the issue, they are all united in drawing a distinction between calling inside of the application and calling outside of the application, and in demanding some form of payment to place calls to phone numbers in the PSTN.

One of these new apps (and judging by user-reviews, the best-performing overall) is called Meucci and operates as follows: after installation the application scours all of the user’s contacts, and allows the user to place calls to these numbers directly.  After making the call in the application, it then dials a local number which connects to a VoIP server, and transits the call over the public internet to the called party’s locality.  The called party can then connect either over data or by calling a local conference number sent by SMS.  To the telecom carrier operating the user’s GSM network, a call placed through Meucci shows up as a local call, with the same being true for the called party’s carrier on the other end who is terminating the call, depending on whether it terminates over IP or GSM.

In the author’s experience the application doesn’t live up to its promise — there is in fact a distinction in use between in-app and out-of-app users, and, for the called party, connecting by dialing a number in an SMS is unfamiliar and perhaps prohibitively awkward.  Nevertheless, calls that previously could only have been made using a Service Provider’s infrastructure according to international calling agreements with other providers or through a pure-IP calling app with extra payment for the connection to the PTSN can now be made as a local call.

From the Service Provider’s perspective, in allowing callers to avoid international tolls and even IP-based calls over capped data networks Meucci threatens one of the few remaining high-value pure-voice revenue streams.  Given their shortcomings, apps like Meucci and CallPal are not game-changers — with small user-bases, relatively unstable or unappealing performance and usage limited to personal — they do not immediately threaten Service Providers who focus on Hosted PBX and UCaaS for enterprise.  Nevertheless, they illustrate the extent to which the maturation of VoIP technology and the development of IP infrastructure have the potential to threaten established revenue streams in ways scarcely conceivable in years past.

Posted Under:VoIP Logic Blog