Voice will remain the killer mobile app for the foreseeable future, but how will carriers integrate it with LTE ?

Data might be the driving force behind LTE’s gathering pace, but there’s no escaping the fact that voice continues to be the killer application for mobile operators. “Smart” they may be, but drop the “phone” element from the current crop of devices and you’re dropping 64 per cent of your revenues—according to Ovum research, this is the percentage of MNO turnover that voice will generate by 2015.

LTE standards were developed from the getgo on the understanding that circuit-switched voice was not going to be part of the overall picture. This means that mobile operators are faced with the task of bridging the gap between their network evolution strategies and current 2/3G realities.

It’s partly their own fault: back in 2002, the 3GPP identified IP Multimedia Subsystem (IMS) as the specification for packet voice. Since then most of the equipment vendors have developed IMS implementations, and they’ve had them for some time. But expensive- to-implement IMS languished on the sidelines while operators focused on LTE projects, dropping the voice ball in favour of tackling the seemingly more immediate threat from a mobile data explosion and the slew of over-the-top (OTT) players that followed in its wake. It was always just assumed that issues such as global scale, interoperability, interconnect and roaming would somehow have been dealt with by the time LTE was ready. Until recently, they weren’t.

The GSMA’s VoLTE initiative was launched in February 2010 and has subsequently been involved in defining the protocols and standards required to make voice over LTE work harmoniously across devices and networks. IMS is a central component of making it work. “The problem we were always going to have with IMS was justifying it as a technology from a business case perspective,” says Dan Warren, senior director of technology at the GSMA.

Now that the VoLTE initiative has brought IMS back to centre stage (VoLTE is essentially voice services in the IMS core), perceptions that IMS is too complex or pricey have given way to expediency. “Voice on its own justifies the expense,” says Warren. “It’s a hundreds of billions of dollars market that needs to evolve to something new. IMS is the best game in town for the carriers to do that with. That alone justifies IMS as a future-facing technology.”

Given that we’re some years away from anything like blanket LTE coverage, roaming and parallel network maintenance will be the name of the game. Many telcos will use LTE for data and legacy networks for voice on a circuit-switched fallback (CSFB)/single radio voice call continuity (SRVCC) basis. CSFB has attracted its share of criticism, with Steve Shaw, vice president for corporate marketing at infrastructure player Kineto Wireless calling it a “truly horrific solution” that gives early LTE device adopters a “whole reason not to take a call—and that’s your primary revenue lifeblood.”

Be that as it may, for most operators right now, voice is a 2/3G play and will be for the foreseeable future. Ovum analyst Steven Hartley notes that the likes of US carrier MetroPCS and Japanese incumbent NTT DoCoMo are both following a CRFB transition path in the early stages of their LTE deployments. “LTE is used for data, legacy networks for voice,” he says. “It involves maintaining parallel networks, but you’re going to need to do that anyway until LTE coverage and device penetration is sufficient to switch them off.”

Tommy Ljunggren, SVP of system development and mobility services at LTE pioneer TeliaSonera, has said that his firm’s 4G launch was made easier by the fact that TeliaSonera “focused on data only and wasn’t complicated by voice and voice integration with legacy systems and so on.”

Meanwhile, Ericsson’s head of Mobile Telephony Evolution, Eric Ericsson, says that the most common evolutionary path he sees operators choosing involves CSFB in some way, not least because it’s the industry choice for supporting inbound LTE roamers who don’t have IMS services or roaming capabilities.

“We’re seeing operators introducing LTE with enabled handsets and then opting for CSFB in the initial stages while coverage is spotty,” he says. The natural progression for most of these operators will be to upgrade to VoLTE one-to-two years later, using SRVCC to manage handover between LTE and the circuit switched network. It’s an interim measure, yes, but as Ericsson points out, carriers have already invested heavily in their 3G networks. Given that a primary driver of LTE implementation is cost rationalisation in core access, throwing the 3G baby out with the bathwater doesn’t currently make any sense.

Ericsson says that many of the implementations his company is involved in re-use the existing legacy environment of the MSC, “breaking out to the legacy world so our existing mobile media gateways remain in the network, even for VoLTE.” Ultimately, when LTE has broader reach, fallback will be onto the HSPA or 1xEVDO network— “that’s the all-IP scenario,” he says. “The availability of spectrum steers the technologies.”

For Ericsson, it’s all about evolving the mobile core while maintaining a connection to the legacy, rather than replacing it completely. Some might not like it—the GSMA’s Warren, for example, says that interim steps between CS and IMS will be difficult to switch off in the long term—but with Ericsson predicting that “there will be circuit-switched users on the mobile side beyond 2020,” it’s clear that there is going to have to be some degree of pragmatism in operators’ LTE strategies going forward.

Four myths about LTE
Stephen Hayes, principal engineer at Ericsson and chair of the 3GPP’s systems group has said there are four myths surrounding LTE and its capacity to carry voice. According to Hayes, these myths—and the realities—are:
• LTE is data only: Support for voice was one of the key considerations in designing LTE. The solution for
LTE is IMS VoIP and it is fully specified.
• SMS isn’t supported over LTE: LTE and EPS (evolved packet system) will support a rich variety of
messaging applications—including SMS. The solution is twofold, covering both the full IMS case and a
transition solution for those networks that do not support IMS.
• IMS isn’t ready for prime time: IMS was first developed as part of 3GPP Release 5 in2002. It is based on
IETF protocols, such as SIP and SDP, that are very mature. These technologies have been embraced by
the industry as the signalling mechanism for multimedia applications.
• LTE doesn’t support emergency calls: VoIP support for emergency calls (including location) are included
in Release 9.
A transition solution—fallback to 3G/2G has existed since IMS was introduced in Rel5.

While CSFB will be the way forward for many operators transitioning to LTE, carriers that are pursuing a more aggressive path to the future, such as Verizon, are leaping with both feet into an all-IP future. Rather than looking at 100 per cent backwards compatibility, the telco is evolving straight into offering services that will compete with other OTT communications services. Having demonstrated one of the world’s first VoLTE calls at this year’s Mobile World Congress on Samsung’s Revolution handset, the company is gearing up for the commercial launch of VoLTE-using-IMS in 2012. AT&T will follow suit by 2013; T-Mobile USA, according to Warren, will be sticking with HSPA+ for quite some time “because their last RAN investment gives them that evolutionary path via software but doesn’t allow for an LTE upgrade without a hardware investment.”

Verizon’s more direct migration path can, in some ways, be attributed to its existing CDMA network, which isn’t easily compatible with LTE. But it’s also likely to be part of a broader industry anxiety about OTT players and the damage that some observers believe they’ll be able to inflict on operators who spend too long hanging around on CSFB. Circuit-switched fall back sceptics like Kineto’s Steve Shaw say that, by implementing it, operators are opening the door to providers like Skype who can offer full video and audio calling over LTE’s super-fast, super-efficient technology. Shaw maintains that subscribers will simply stay on LTE, using OTT services for voice, getting annoyed with CSFB-induced delays and gradually eschewing carrier services for calls.

For the GSMA’s Warren, however, it’s a glass-half-full/half-empty scenario. While he believes that it is unrealistic to even try to pretend that OTT voice is going to go away, there are plenty of drawbacks to voice offered on an OTT basis, not least quality of service. As Acme Packet director of solutions marketing, Kevin Mitchell says: “Left alone, IP networks treat every packet the same.”

Policies need to be put in place to ensure QoS for latency-sensitive services like voice and video, giving them priority and the bandwidth path they need. “Even though LTE gives us blazing-fast bandwidth, there are different constraints and choke points sill in place,” says Mitchell. “It doesn’t mean resources can’t be overloaded in the core network.”

Engineering around that and implementing session border controllers can handle those issues, ensuring the QoS paths are there in a way that OTT players simply can’t.

And if Kineto’s Shaw thinks users won’t be happy having their video streaming interrupted to take a call, Warren believes they’re even less likely to tolerate a bad voice service. “Unless it’s an OTT service that fully integrates and works out of the box, there are still a lot of people out there who want high-quality voice provided by an operator,” he says. One of the best things about the Verizon demo, according to Warren, was the use of AML wideband and high-definition voice, something he believes end users will see as a real benefit going forward. Kevin Mitchell agrees, saying that IMS architecture is carrier-grade, not OTT or best effort.

“There’s a view out there that voice has become the domain of OTT, some kind of arbitrage or dial-around that doesn’t involve the service provider in the revenue stream, but IMS is VoIP,” he says. “Service providers using IMS have control over the access network, policy control mechanisms…they’re deploying different technologies throughout the access and core networks to make sure its carrier grade.”

According to Mitchell, OTTs can bring a lot of innovation to an all-IP environment, but at basic levels of QoS, compliance and emergency services offerings, they’re not in anywhere like the same category as traditional operators. As Eric Ericsson puts it, OTT services are “at the telephony and service layer, but aren’t specified in using the lower layers for optimised media handling, policy control and radio capabilities. That’s why VoLTE, in terms of robustness, will work differently and better than a service running OTT.”

While Mitchell sees a future in a service federation model—where OTT players and carriers such as Skype and 3/Verizon/KDDI offer hints of how the two sides might cooperate at the network as well as the business level—Warren argues that there’s plenty of room for operators to go it alone on the VoLTE front. “Companies aren’t going to invest in the IMS core just for voice,” he says. With operators evolving their service offerings in order to compete, it’s only a matter of time before people are persuaded of the value of voice calls plus the entire IMS-enabled infrastructure built around it, he argues.

“Give subscribers the capability to do instant messaging in a way similar to SMS, give them presence information and data relating to what the person they’re calling is able to do with their phone—like a classic rich content suit (RCS) model of a contact list—promote interaction between users and their contact lists in ways they might not otherwise have done,” says Warren. “Ultimately that drives up call volumes.” And, presumably, revenues.

For Ovum analyst Steven Hartley, while voice is becoming commoditised and isn’t generating revenues in line with volumes, neither is data. The key strategic objective as voice moves on to LTE, he says, will be “managing costs effectively to ensure margins are protected, even if revenues are under pressure.”

Ultimately, says Hartley, operators will charge access fees that include bundles of minutes, text, data and whatever else they want to throw in. What proportion goes to voice or any other element is actually irrelevant, as long as the whole is making a profit…”

In many ways, VoLTE represents a real opportunity for carriers to transition into the smart pipe stage by differentiating themselves on voice and services related to it. As Dan Warren puts it, operators are definitely chasing more bandwidth. In terms of how or what they do with it, there aren’t really any right or wrong answers, just “answers based on each individual market and their spectrum availability and their map for technical evolution.”

For operators calling time on carriers’ relevance in the face of CSFB vs OTT, it’s worth taking a couple of steps back. Yes, there are a lot of players moving very quickly but devices are limited and, as Warren points out, they’re essentially de-bugging LTE on the fly. If VoLTE isn’t 100 per cent there, it’s only fair to point out that neither are the LTE deployments or the handsets that will take advantage of them. Sounds like a good time to bridge the IMS gap.

O2 is trialling O2 Connect in the UK

UK mobile operator O2 is trialling a VoIP technology offering to a to select group of customers. O2 Connect will allow smartphone users to use voice and text services over wifi networks from their normal mobile number to any UK mobile or landline number.

O2 Connect will initially be available on all iOS and Android handsets and will subsequently roll out to other devices.

“This trial will allow us to explore the potential of delivering VoIP services to customers. We hope to launch O2 Connect as a commercial service in 2012.” explained Richard Porter, head of consumer mobile products, O2 in the UK.

A group of 1,000 people will be able to take part in the trial, initially for free, to assess how the service can be deployed to customers as well as participating in the development of new features.

The company said that the service has benefits over existing services such as Skype as it doesn’t require the user to set up a separate account or ID, and they can use their existing phone number instead. In addition, users are not restricted to communicating only with other users of the service, but can call and text anybody with a normal UK mobile or landline number.

The trial will commence in October 2011 by invitation only and will include O2 consumer and business customers. The trial will also be extended to attendees at Wired 2011. The operator said that it will monitor how customers use O2 Connect before deciding the pricing structure of a finished version of the service.

“We see O2 Connect as part of an overall communications offering from O2,” said an O2 spokesperson. ”By offering enhanced communication features we anticipate that we will attract new customers and improve the experience for existing customers, driving an increase customer satisfaction.  We anticipate that in a commercial product, some parts of the O2 Connect service will be included within existing pricing; others will be sold as extras.”

The service is the latest in a series of developments from O2 Labs. O2 Labs aims to introduce new services in different ways, with extensive beta testing and involvement of customers in the product development process.

Skype is expanding it capabilities through acquisitions

Internet telephony player Skype, recently acquired by Microsoft, is doing some shopping of its own, entering into an agreement to acquire mobile group messaging provider GroupMe.

GroupMe is a very new startup, having only been founded in 2010 in New York, and allows users to group text, conference call, and share pictures and location data. Skype said the purchase, which is for an undisclosed sum, complements the acquisition of mobile video provider Qik earlier this year.

Qik is a US-based mobile video sharing platform, which gives the VoIP firm greater capabilities in the mobile telephony market on both mobile and desktop type devices.

Microsoft announced its intention to buy Skype for $8.5bn in May this year and has received the go-ahead from American anti-trust regulators, following an “early termination” of a review into the proposed sale. The VoIP player claims 170 million connected users of over 200 billion minutes of voice and video conversation in 2010.

There are 1.65 million SME's in the US, which are not being properly served, said Inzenka

The US telecom industry could be missing out on as much as $16bn in annual revenues by failing to properly address the needs of SMEs, according to research released recently by consultancy Inzenka. The firm warned that telcos are not offering SME customers leading edge VoIP and cloud services that could enable the customers to improve their own efficiencies, at the same time boosting carrier revenues.

A survey of US SMEs involving 700 respondents found that only 27 per cent are currently using VoIP, with half of the remaining 73 per cent saying they would like to move to VoIP services within two years. And one third of respondents said they would consider buying cloud and other services from a provider selling them VoIP services.

Inzenka concluded that US service providers, while adept at selling packages into large corporate clients, have not developed their ability to craft offerings compatible with the 1.65 million US SMEs, which lack the sophisticated infrastructure and IT expertise of large enterprises.

Andy Katz, Inzenka co-founder, went so far as to suggest that, in failing to adequately address the SME market, US telcos could be stifling the US economic recovery. “SMBs deserve as much respect as larger companies, but they are also the engine of any nation’s economic growth potential,” Katz said. “So depriving SMBs of the advantages brought by new technology will inevitably weaken the US post-recession recovery, as well as impacting on the top and bottom line of US telecoms companies.“

Microsoft will be able to silently record web-based communications, including Skype

Microsoft has been granted a patent for a technology that will allow it to listen in on web-based communications such as video and voice calls – including those made on its recently acquired Skype service.

The patent for the “Legal Intercept” technology was filed in December 2009, long before Redmond’s $8.5bn acquisition of the world’s most popular VoIP application; Skype is, however, mentioned in the context of possible applications of the technology in the original patent application, which is for “silently recording communications.”

According to a summary of the technology in the patent application, “data associated with a request to establish a communication is modified to cause  the communication to be established via a path that includes a recording agent…because of the way in which the data has been modified a protocol entity selects a path that includes the recording agent..[which] then silently records the communication.”

Among the listed examples of “systems, environments or configurations that may be suitable for use” with aspects of the technology are PCs, handheld devices, servers, set-top boxes, smartphones, gaming devices, printers and automobile-embedded devices. Hardly surprising, then, that privacy groups such as America’s Centre for Digital Democracy (CDD), are expressing concern about the possibilities of such technology. IT in Government reports that CDD executive director Jeffrey Chester has said the patent “aligns with Microsoft’s broader goals” of incorporating tracking technologies in its Skype services in order to “aggressively expand its mobile advertising system across the world.” In addition, Chester suggested that, as a consequence of the technology, Skype “will likely soon have ad targeting and user profiling digit strings attached.”

Other commentators, while accepting that the patent complies with legal requirements governing the use of such technology in the US, have pointed out that covert surveillance requests can just as readily be used by despots as by legitimate entities. Other have raised concerns regarding the knock-on security effects of creating “back doors” into voice and data networks.

VoLTE could level the playing field for operators under threat from OTT players

Figures from industry body the GSA (Global Mobile Suppliers Association) reveal that 208 operators in 80 countries are now investing in LTE. But while rollouts aimed at consumers are gaining momentum, a study undertaken by research house mobileSquared indicates that one third of operators have no trials or network deployments underway at the moment.

Although these operators said they expected to deploy LTE at a future date, almost a quarter of those surveyed said they had yet to make any decision on LTE because of spectrum or cost issues.

With none of the 38 operators surveyed by mobileSquared believing that LTE handsets would be widely available this year, it’s hardly surprising that 34 per cent of respondents thought that LTE would not become a viable consumer offering before 2013; a further 18 per cent said that 2014 was a more feasible date. According to mobileSquared, this timeframe ties in with a number of operator announcements: AT&T plans to introduce voice over LTE (VoLTE) by 2013 after an initial roll out of circuit-switched fallback (CSFB) and has begun integrating its IMS architecture.

Verizon Wireless, meanwhile, plans to launch VoLTE services in 2012; MetroPCS, having partnered with HTC to roll out a VoLTE-enabled handset, is planning trials for the voice technology later this year.

According to mobileSquared, the adoption of VoLTE by operators is “significant on a number of levels”. Key among these is the price point for IP-based communications. With revenues for voice over internet pricing models close to zero, carriers will be “forced to innovate in terms of how services are offered, packaged and priced,” according to the report. As such, “The most obvious option is to bundle Unified Communications (UC) and Rich Communications Suites (RCS) in a single address book, enabling users to track presence, IM, voice and video calls all with the same identifier – the mobile phone number.”

The report further adds that quality of service (QoS) on connecting network-based mobile VoIP calls will be so much better than over-the-top (OTT) services that a “de facto two-tier system” will be created. “A VoLTE call would be explicitly indentified in the operator domain as real time conversation and routed with low latency transit from network to network, whereas an OTT call would be treated as traditional data on the internet,” according to mobileSquared.

The report, which was sponsored by Broadsoft, concludes that mobile VoIP and the introduction of VoLTE  have levelled the playing field for operators under pressure from OTT players and possibly even given them a competitive advantage, as associated UC offerings that specifically target the business market could prove lucrative. With this last point in mind, it seems that any operators should consider a change in current strategy: 45 per cent of those surveyed admitted that they did not feel they were well positioned to sell LTE as an enterprise solution because of their retail focus. The report concludes that these carriers are missing an opportunity by “not adjusting their business model to include a direct sales force focused on selling more than just minutes of voice to enterprise customers.”

Microsoft's bid for Skype has been approved by US authorities

Microsoft’s bid for Skype has received the go-ahead from American anti-trust regulators, following an “early termination” of a review into the proposed sale. Under America’s Hart-Scott-Rodinho (HSR) Act, certain types of large mergers and acquisitions deals must be submitted for review by the government.

The Act requires that companies file details of proposed deals with the Federal Trade Commission (FTC) and Department of Justice (DoJ) before being assessed by an anti-trust agency. In cases where the review has been completed and there is no intention to take action to prevent a deal from going ahead, companies can request “early termination”, allowing deals to go ahead without waiting for a statutory period of time to pass.

Microsoft announced its intention to buy Skype for $8.5bn in May this year. The move gives the software giant a greater presence in the unified communications market, as it seeks to roll out VoIP and video calling capabilities; Skype claims 170 million connected users of over 200 billion minutes of voice and video conversation in 2010. The acquisition is the largest in Microsoft’s history and comes at a time when, despite significant marketing initiatives, the company has remained something of a laggard behind rivals Google and Facebook in the online space. Redmond’s Bing search offering accounts for 30 per cent market share in America, compared to Google’s 64 per cent.

A tight integration of Skype’s offerings with Microsoft’s Windows Mobile OS, Xbox and Kinect gaming devices and other communications services should see Redmond taking its game to Apple, which has made significant inroads in the video communications space with its Facetime offering. The acquisition of Skype, coupled with Microsoft’s recent deal with Nokia, could help Redmond further develop relationships with carriers in an effort to play catch-up with Apple and Android.

According to Ovum principal analyst Richard Edwards, Apple Facetime’s availability on Mac, iPhone 4, iPad 2 and iPod touch mean “it is definitely now or never for Microsoft.” Edwards says that while there are other products and companies out there that offer a better fit architecturally than Skype and come with a lower pricetag, “Skype is undoubtedly the product Microsoft needs to stay in the game…It’s popular, it runs on Windows PCs and later this year it will be available on Windows Phone 7.”

Telstra will invest AU$800m in cloud computing over the next five years

Telstra has announced a £500m+ (AU$800m) investment in cloud computing over the next five years to support what it says is a growing demand from Australian organisations for cloud services.

The telco is rumoured to have invested AU$200m in the cloud to date and this latest announcement will kick-off the construction of a new data centre, the modernisation of existing facilities, increased automation of utility computing services and the expansion of the telco’s range of enterprise applications, among other things. Construction of a new data centre in Melbourne is already underway.

CEO David Thodey said that sales of the company’s T-Suite software-as-a-service (SaaS) offering had grown threefold in the past year, while use of Telstra’s cloud infrastructure had increased by 50 per cent. Making the announcement, Thodey said that the company was “also experiencing strong sales in our cloud voice and video services, which are exceeding 80 per cent per year and we now manage more than 100,000 IP telephony services delivered from the cloud.”

Telstra is partnering with vendors Cisco, VMware, Microsoft and Accenture to build the next phase of its integrated cloud platform and services. According to the company, cloud is part of Telstra’s strategy to grow its network application and services business. The telco says that, over the past year, it has spoken to more than 160 Australian organisations about their cloud computing needs, “with many of these beginning to move into the cloud.” Among those using Telstra’s cloud services are Tristar Medical Group, Oz Minerals and The Salvation Army Employment Plus.

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Everyone wins with VoLTE

Telcos and kit makers have responded with indignation to last week’s International Multimedia Telecommunications Consortium’s (IMTC) announcement to the effect that it had completed the first ever voice over LTE (VoLTE) test on a live LTE infrastructure. While it’s not quite Elisha Gray vs Alexander Graham Bell, it seems that, when it comes to VoLTE, everybody wants to be a winner.

First out of the blocks was Verizon, pointing to its first VoLTE call, made at the firm’s Basking Ridge HQ on the 8th February this year – a “milestone” for which the corporate communications team at Verizon was keen to remind us the telco had received the congratulations of GSMA CTO  Alex Sinclair.

According to Verizon, these world-first calls were made on its commercial network using LG Revolution phones. Employees at the telco made voice calls while continuing to use data services such as video without any apparent effect on the quality of the voice call.

Fast forward to February 14^th and this year’s Mobile World Congress, at which Ericsson, Verizon and Samsung made what was, at the time, labelled “one of the world’s first LTE voice calls” on Ericsson’s demo LTE network using Samsung’s 4G LTE handset. The Valentine’s Day voice love-in continued for Ericsson with the announcement of voice over TD-LTE calls made in conjunction with China Mobile, Sony Ericsson and ST-Ericsson – a move that showcased “voice services for the first time.” While Ericsson claims that it and Verizon were the first to demo VoLTE, at the time of writing, it’s unclear whether the Swedish giant is referring to the demo at MWC or the incident at Basking Ridge as proof of its gold medal status. Not that any of this matters if Hong Kong carrier CSL has its way…

CSL  is equally keen to establish its first-past-the-post credentials on the VoLTE front. CSL, a subsidiary of Australia’s Telstra, says that, together with Chinese kit maker ZTE, it made the first VoLTE call on live LTE infrastructure at the GSMA Mobile Congress Asia event. Given that this event took place in November 2010, CSL-ZTE can claim the best part of three months over Verizon’s “first”.

Three months ahead of the chase is pretty good, but surely can’t hold a candle to Nokia Siemens Networks and Samsung’s VoLTE demo at the CTIA Wireless 2010 event in March of that year. This was, apparently, the first standards-compliant instance of a VoLTE call on an end-to-end network between different vendors. This demo was done on laptops sporting VoLTE clients.

The devil’s in the detail – with everyone claiming a little piece of history, it’s sometimes hard to keep track of the fine print which makes each claimant correct in its way. Verizon and Ericsson score on the end-to-end front, as does China Mobile on a slightly different technology. Neither is CSL engaged in what might be called terminological inexactitude – its VoLTE victory came in the form of IMS-based VoLTE calls on CSL’s LTE and existing 2/3G networks, using conventional devices and a laptop with a dialler interface. No swanky, uninterrupted video to be seen, but supplementary services like call waiting and forwarding were also demo’d. Verizon, which was pretty strong in its insistence that it got there first, wasn’t keen to say exactly how its February date with destiny differed from CSL’s the previous November – beyond a simple reiteration of its claim that it was the world’s first commercial demo.

Which brings us back to the IMTC and its SuperOp testing event in Hawaii last week. The first being claimed here is VoLTE in a multi-device, common user network interface setting. On a live commercial LTE network. That’s that sorted, then.

Perhaps the last word on the matter should go to the GSMA’s senior director of technology, Dan Warren, who says the VoLTE event at the MWC was “the dullest demo of the show” because it just showed someone performing the simple act of making a voice call. Which, Warren duly noted, is the whole point of the exercise. “The person on the street will be sold on the marketing of ‘4G’ for a bunch of stuff other than voice, but would they buy a phone that didn’t make voice calls?”. For Warren, “the fun starts when the voice calls become part of something bigger, and that is ultimately what VoLTE is going to be all about.”

Skype ready to say "Bye Bye" to independence and "I Love You" to Microsoft

Software giant Microsoft on Tuesday announced the acquisition of VoIP company Skype in an all cash deal worth $8.5bn. Such a move gives Microsoft a greater presence  in the unified communications sphere with internet telephony and video calling capabilities.

The acquisition is the largest in Microsoft’s history, and gives it a significant foothold in the online communication world, with Skype claiming 170 million connected users and over 207 billion minutes of voice and video conversations in 2010.

Despite huge injections of cash on marketing, Microsoft remains a laggard in the online space behind leading brands such as Google and Facebook. Online searches provided by Microsoft’s Bing search accounted for 30 per cent of the US market in April 2011 compared to Google’s 64 per cent, according to Experian Hitwise statistics.

On the video communications side, rival Apple, which recently overtook Microsoft to become the most valuable technology company in the world, has great presence with its Facetime video tool, which is available on all of its webcam enabled iOS4 devices. A tight association between Skype and Microsoft could help the Redmond based company push its Windows 7 based devices, which have struggle to make a dent in a smartphone market dominated by Apple iOS4 and Google Android powered handsets.

Additionally, with the deployment of fast LTE networks gathering apace throughout the world, the use of Skype is likely to continue to grow. This will give Microsoft a relationship with networks operators as they look for ways to promote their LTE networks.

Skype will become a new business division within Microsoft, and Skype CEO Tony Bates will assume the title of president of the Microsoft Skype Division, reporting directly to Steve Ballmer. Skype will support Microsoft devices like Xbox and Kinect and Windows Phone, and Microsoft will connect Skype users with Lync, Outlook, Xbox Live and other communities. Microsoft will continue to invest in and support Skype clients on non-Microsoft platforms.

“With Apple FaceTime – a competitor to Skype – now available on the Mac, iPhone 4, iPad 2 and the new iPod touch, it is definitely now or never for Microsoft,” said Ovum principal analyst Richard Edwards.

“There are other products and companies out there that offer a much better fit architecturally than Skype (and they come with a much cheaper price tag too), but Skype is undoubtedly the product Microsoft needs to stay in the game.

“Skype is arguably the most successful real-time social communication platform on the planet, and its $8bn price tag means that only companies such as Microsoft have any chance of acquiring it, “But is it a good fit for Microsoft’s business model? Answer: Yes. It’s popular, it runs on Windows PCs, and later this year it will be available on Windows Phone 7.”

Giles Cottle, senior analyst at Informa Telecpms & Media, added that despite scepticism at Microsoft’s ability to handle big acquisitions, Redmond is a better home for Skype than some of the company’s other rumoured suitors. “Microsoft undoubtedly has over-paid for Skype in the short-term, but potentially not in the long term. Buying Skype gives Microsoft the ability to do whatever it wants with voice to an audience of 700 million users. This kind of scale does not come cheap,” he said.

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