Opinion Paper

VoIP Goes Mobile:

Blessing and Curse to Operators

Or Just Another Hype?

2011/03

We make ICT strategies work

 The Disruptive Potential of mVoIP – Or Just Another Hype?

Table of Contents
1 Executive Summary............................................................................................. 3
2 (m)VoIP – The Point of Departure ....................................................................... 4
3 The Main mVoIP Players and Future Potentials.................................................. 6
4 The Threat to Telcos ......................................................................................... 11
5 Observed Reaction Patterns of Telcos.............................................................. 14
6 Option Space for Telcos .................................................................................... 16
7 Play out, Change, or Waste Away..................................................................... 18
8 The Authors ....................................................................................................... 19
9 The Company .................................................................................................... 20

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 The Disruptive Potential of mVoIP – Or Just Another Hype?

1 Executive Summary

mVoIP (mobile Voice over IP), traditionally a niche product for a small group of people, is
now becoming a mass market service. It is supported by most regulators, enabled by new
technologies, demanded by customers – and it has opened up a window of opportunity for
new market entrants such as Apple, Google, and Facebook. This is why traditional mobile
network operators (MNOs) and integrated operators may soon face their biggest challenge
from mVoIP, which could significantly reduce their influence and ultimately their revenues,
too.

Should MNOs be resigned to their fate? We do not think so. Certainly will the customers'
anticipated adoption of mVoIP lead to some substitution of MNOs' traditional voice revenues:
Some users are attracted by cheaper calls, whereas other users are attracted by mVoIP’s
integration with new communication features such as social networking and video
conferencing. However, the use of mVoIP requires the user to have Internet access, i.e. both
a data plan and data coverage. Both of these conditions can only be satisfied by MNOs and
here they have the opportunity of generating additional revenues to their business. Secondly,
when it comes to providing the best embedded voice services, mVoIP providers could fall
short. There is no reason then why MNOs should not be able to play a significant role in this
field.

Obviously, this requires MNOs to venture into the converging worlds of telecommunications
and IT. There clearly is no sustainable alternative to this development.

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 The Disruptive Potential of mVoIP – Or Just Another Hype?

2 (m)VoIP – The Point of Departure

Let us take a condensed look at fixed VoIP from the end user’s perspective. So, when sitting
in front of your computer and using a landline, the accelerators and brakes for VoIP are the
following:

VoIP advantages

Cost savings: VoIP-based calls are free of charge within a VoIP provider’s community. This
allows “free” calls – data access being the only priced prerequisite. In international calls,
where charges are typically highest, VoIP is most attractive. Out-of-community calls,
however, usually get charged but are still often much cheaper than regular phone services.

Varied features: Call forwarding, call waiting, voicemail, caller ID, conference calls, video
calls, instant messaging, and file transfer are some of the many traits included with IP
telephony at no extra charge. Since you are using a computer and have Internet access, you
can use all kinds of services prior to the call (e.g. check your friends’ presence via
Facebook) and during the call (e.g. browse the same document as the person you are
talking to).

Easy portability: Location-independency enables the user to make VoIP calls wherever there
is a broadband connection simply by signing into the VoIP account. This characteristic
makes VoIP as user friendly as e-mail, for example.

VoIP disadvantages

Imperfect substitution: Regular phones are kept in service by the current supplied through
the phone line, but VoIP on a desktop PC stands still when the power is off (e.g. during a
blackout). Also, when it comes to emergency calls, only regular circuit-switched calls can be
traced.

Unsteady quality and reliability: Data sent across the Internet usually arrives at its destination
quite scrambled. Reassembling occurs once all data has arrived. The duration for this
procedure depends largely on the network traffic. This is an issue for real-time and high-
quality voice over data.

Limited convenience: OTT VoIP, like Skype, is confined to computers, thus limiting the scope
for spontaneous calls because an Internet-connected computer is required, the VoIP
application has to be running and the user must be sitting in front of it, typically with a
headset, too.

However, despite all the drawbacks, the pros seem to outweigh the cons in many occasions.
The very fact that month after month about 124 million people connect through Skype1– the
market leader amongst all OTT VoIP providers – serves as proof of VoIP’s attraction1.

1
about.skype.com

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Smartphones: the perfect (mobile) VoIP terminals

Current mobile “smartphones” are a near-perfect platform for VoIP: They combine Internet
access, computing power to operate several programs in parallel, and a display large
enough to display all kinds of content. Hence, they eliminate many of the hassles and
imperfections associated with making VoIP calls over the computer or the fixed line.

Apple is one of the players to have developed a user-friendly mobile VoIP application:
Q Placing VoIP calls via 3G: On May 30th, 2010 Skype enabled VoIP calls on the
iPhone via 3G, allowing free Skype-to-Skype calls and international calls at
reduced rates, bypassing the MNO.
Q Receive VoIP calls while using other apps: Multitasking makes it possible to
receive Skype calls while other apps are running, even when the iPhone is
locked.

New

3G
incoming &
outgoing calls

Before

Wi-Fi Only
Practical only for
outgoing calls

Considering these recent developments, it is conceivable that VoIP providers will find further
ways to integrate their services even more smoothly in the future.

In brief, the users can expect three key advantages of mobile VoIP over the traditional
mobile call:
Q Cost: Users can benefit from the Internet cost structure in terms of lower
(international) calling costs.
Q Convenience: It is possible to use several, enriched services (e.g. shared
calendars, phonebooks) and other services that help to make or receive a call
to or from the right person at the right time. Users have easy access to choose
the one of many channels for communicating (instant messaging, e-mail, SMS,
voice).
Q Community: Users can benefit from the integration of social network platforms
by always being synchronized with their friends and business contacts.

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 The Disruptive Potential of mVoIP – Or Just Another Hype?

3 The Main mVoIP Players and Future Potentials

Current landscape

Currently, the mVoIP provider ecosystem is unquestionably dominated by Skype, which has
over 560 million registered accounts and carried 95 billion minutes of voice traffic in the first
half of 20102. Aside from Skype, there are a few midsize players, such as Fring, Nimbuzz,
and Mig33, who offer similar mVoIP services and compete either through appealing to a
specific region (e.g. Nimbuzz in the Netherlands) or by offering special features (e.g. Mig33).
Finally, there are the small scale providers, many of whom do not provide true mVoIP
service but rather just low cost international calling using virtual numbers. This landscape is
modeled in Figure 1.

Figure 1

Recently, aside from these providers who are directly involved in offering mVoIP services,
other Internet service companies such as Google, Yahoo, and Facebook, are increasingly
moving towards offering voice communication as a value-added service to complement their
main service offerings. Given their size and influence, these players have the potential to
change the mVoIP landscape significantly in the next few years.

Skype: The market leader

Skype, founded in 2003 in Luxembourg, is the undisputed leader of the mVoIP industry. As
of Q3 2010, an average of 124 million users connect through Skype each month3 and it is on

2
Skype IPO Filing (http://sec.gov/Archives/edgar/data/1498209/000119312510182561/ds1.htm)
3
Ibid.

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track to earning over $800 million in revenue in 20104. The revenue is based largely on paid
calls. The company’s growth since 2005 is illustrated in Figure 25.

Figure 2

Major contributors to Skype’s astronomical growth in the last seven years since its founding
are the inherent strengths that the company brings to the table. One of the differentiators of
Skype from other VoIP providers is its proprietary VoIP network, which is based on a peer-
to-peer model rather than a client-server model. This model allows Skype to keep costs low
while also scaling up capacity at the same time, enabling the company to maintain low prices
for calls. Additionally, the Skype protocol is very effective at traversing firewalls or other
security systems so that the client will work for almost all users without the users having to
manually adjust complicated network configurations. Another advantage that Skype
possesses is its high quality SILK audio codec, which can capture any sounds with
frequencies between 50 Hz and 12,000 Hz6. As a comparison, traditional circuit switched
voice systems capture frequencies between 400 Hz and 3,400 Hz. Additionally, the SILK
codec was designed to use very little bandwidth, which is ideal for capacity-strained mobile
networks. Finally, the most important asset for Skype is its huge user base. At over 50
million active users, the sheer network effect prevents any other VoIP network from gaining
traction and cements Skype’s dominance of the market.

Skype has introduced a number of disruptive measures in the last few months. One of the
most significant is its partnership with Facebook, in which Skype users can use Facebook
Connect to instantly call, text, IM, or video chat with Facebook contacts. This serves to
significantly increase Skype’s network effects by making even more of each user’s contacts
available through the Skype client. Although no Skype services were integrated into
Facebook as a result of this partnership, this development allows Skype to stave off
competition from other networks and puts Skype into the position of a partner for Facebook
rather than a competitor.

4
Techcrunch (http://techcrunch.com/2010/10/04/skype-new-ceo/)
5
Ebay Annual Reports 2006-2009
6
Skype Developer Website (http://developer.skype.com/silk)

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Another significant disruptive move is Skype’s new SkypeKit Beta program, which allows
developers to program Skype features onto any connected consumer electronics device or
integrate them into any software environment. First off, this creates a new revenue stream
for Skype since the company will charge a nominal membership fee to have access to
SkypeKit and fees for testing and certification. More importantly, releasing this development
tool will enable Skype to quickly and cost-effectively expand its presence to the next
generation of connected devices.

Last, but not least, Skype was able to allow 3G VoIP calling on its iPhone application. This,
combined with support for multitasking on iOS 4, has made Skype into a much more
powerful mobile VoIP application for the world’s best selling smartphone. A brief timeline of
Skype’s history and some of its strategic moves through the years is shown in Figure 3.

Figure 3

In the near future, Skype’s main focus will be on acquiring more enterprise business.
Towards that end, it has hired Tony Bates, a former SVP of enterprise products for Cisco, as
CEO. The company has also introduced and expanded the functionality of many of its
enterprise-oriented products. For example, Skype has partnered with Avaya to offer Skype
Connect, which allows employees to make low cost domestic and international VoIP calls
through a desk phone rather than a PC. In addition, its new Skype Channel Partner Program
allows its partners to sell IT services for Skype products. Other enterprise products, such as
call center applications and distance learning solutions, are also rumored to be in
development7. With sufficient growth in the enterprise segment, Skype could be on track to
surpass $1 billion in revenue by the end of 20118.

7
Techcrunch (http://techcrunch.com/2010/10/16/skypes-vp-of-enterprise-on-future-strategy-products-and-
competitors/)
8
Ibid.

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 The Disruptive Potential of mVoIP – Or Just Another Hype?

Google: The unexpected upstart

For eleven years since its founding, Google has never been considered a communications
company. However, with the acquisition of GrandCentral and the subsequent introduction of
Google Voice, Google has unreservedly stepped into the role of a communications provider.
With the integration of true VoIP technology and the ability to make free calls to any number
in the U.S. and Canada, Google has also convincingly thrown its hat into the ring of VoIP
competitors. A brief timeline of Google’s communications activities is highlighted in Figure 4.

Figure 4

Aside from many of the innovative features that Google Voice offers, Google can also
leverage many of its inherent strengths to unseat Skype as the leader of the VoIP market.
The most important advantages it has are simply its size and revenue stream. Google earns
almost 40 times what Skype earns in revenues each year and it does so mostly through
advertising and not through VoIP. This means that Google can invest much more into its
VoIP service and offer such services at a lower cost or even free of charge, since VoIP is
just a small portion of Google’s business that can be used to drive business to its other
segments. For example, Google Voice offers free calls and SMS to any landline or mobile
number in the U.S. and Canada, an offer which Skype cannot match due to its reliance on
paid calling for almost all its revenue.

The other advantages Google has are the network effects and customer contacts through its
Gmail service and Android OS. In the first 24 hours since the Google calling service was
launched on Gmail, over one million calls were made9, potentially indicating a willingness of
Gmail users to switch from Skype to Google Voice as their main VoIP client Additionally, this
service can be deeply integrated with Android such that all Android phones will offer
Google’s calling service, which would create a massive “preload effect” given that an
average of 200,000 Android phones were being activated per day in Q3 201010.

9
Official Google Blog (http://googleblog.blogspot.com/2010/08/call-phones-from-gmail.html)
10
Techcrunch (http://techcrunch.com/2010/08/04/android-activations/)

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Without a doubt, Google will continue to innovate around its mobile VoIP offering in order to
own the market. The most significant move would be to integrate Google Voice into their
network if their rumored “Google Me” social network becomes successful. In late 2010,
Google acquired several social networking companies (Angstro, SocialDeck, Like.com,
Jambool and Slide), all of which could be integrated to create a credible Facebook
competitor. If this is successful and a sizeable (500 million+) number of people join, then a
Google Voice program centered around social networking contacts will have a network effect
similar to that of Skype/Facebook. Together with the free calls that Google Voice offers on
desktop PCs to the mobile app, Google Voice would become an incredibly competitive
mobile VoIP offering.

In addition to this move, Google in general has been moving towards the enterprise space
with its Google Enterprise product offerings. This service already includes Google’s
calendar, document programs, e-mail, and collaboration software, so integrating a VoIP
solution would not be a far-fetched move. Google Voice will definitely need to be improved in
terms of call quality and security in order to become a real enterprise product, but once these
issues are resolved Google will also be a genuine threat not only to Skype’s enterprise
ambitions, but also to all players in the enterprise telephony market.

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 The Disruptive Potential of mVoIP – Or Just Another Hype?

4 The Threat to Telcos

Summary

The threat of mobile VoIP to mobile operators consists of three major advantages that
mVoIP providers will have over traditional telco voice. The most critical advantage is simply
the fact that mVoIP calls can be free of charge while circuit-switched voice cannot. The
introduction and growth of Google Voice and Skype’s tie-in with Facebook are indicating that
the market may indeed be quickly moving toward such a reality. The second advantage of
mVoIP is its integration into social media. In the near future, contacts will be centered more
and more around social networks rather than phone numbers, meaning that people will be
using applications such as Facebook or LinkedIn to contact someone rather than using
phone numbers. The recent partnership between Skype and Facebook may be an early step
in this direction and it is likely that Google will also implement a social network in which
calling will be featured. Finally, mVoIP applications often provide additional features beyond
calling, such as video chat, file sharing, collaboration tools, SMS, chat, and more. Traditional
telco voice is unable to match such a feature set and therefore this is the third advantage
that mVoIP applications will have over telco voice. A summary of these advantages are
shown in Figure 5.

Figure 5

Calling Costs

Although it is a common perception that mobile VoIP is always cheaper than traditional
voice, the truth is that for a majority of regular calling, traditional voice actually enjoys a
significant cost advantage. As an example, a Skype user in Germany would need to pay at
least 20 Euros for a tariff plan including data (plus any associated mVoIP fees) just to be
able to access Skype. Furthermore, then she or he would need to pay about 25 cents per
minute to Skype for making a domestic call to a mobile number in Germany.

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Therefore, the total cost for using just 100 minutes of mobile calling will be 37.50 Euros (30
voice minutes are included in the plan). By contrast, a pure mobile voice plan including 100
all-net minutes costs about 25 Euros per month11. Additionally, many telcos are introducing
international mobile calling plans with unlimited calling to most of the major countries in the
world for a low rate per month, bringing even the cost of international calling down to levels
comparable to mVoIP providers. In this way, the telco has a significant advantage in
providing mobile telephony just based on the cost to complete those calls.

The real threat for telco voice from mobile VoIP providers is the free calling that is often
offered between users of the same VoIP network. Although currently there is not yet a critical
mass of mobile Skype users who substitute much of their regular calls with Skype-to-Skype
free calling, this can obviously change in the near future. With recent announcements such
as the Skype/Facebook partnership and Google’s free calling in the U.S. and Canada,
substitution of regular telco calling for free calling can conceivably increase substantially in
the next few years. In such a reality, the user will only need a data plan and will either forego
a voice/texting plan or get the smallest plan required, reducing ARPU for MNOs significantly.

Social Media Integration and Features

One reason why the Skype/Facebook partnership is potentially a huge disruptive move is the
shift that it represents from communication centered around phone numbers to
communication centered around social networks. This trend is being accelerated first by the
growth of social networks, second, by the growth in consumers’ willingness to communicate
through these social networks, and third, by the limitations of communication around phone
numbers. These limitations include the lack of control over who can call them, being tied to a
single device instead of to a person, and limited functionality. The growth for social networks
and their importance in communication is highlighted in Figure 612,13.

Figure 6

11
Calculation based on exemplary T-Mobile Germany tariff plans as per Feb 2011
( “call&surf XS” vs. “call S”, handset included).
12
Business Insights. The Social Networking Market Opportunity (April 2010)
13
Universal McCann Wave 4 (July 2009)

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In contrast to a phone number, mVoIP through a social network identity allows people to
control who can contact them, is tied very closely to a person, and can allow for a variety of
IP communication services such as VoIP, video chat, and file sharing. Skype on mobile is
able to offer instant messaging, text messaging, and presence information while Fring offers
all that as an aggregation service for multiple IM clients but also offers 3G video chatting. As
a result it will be very difficult for traditional telco voice to compete on features.
Consequently, telco voice and text messaging revenues could suffer as the number of
substitution using mVoIP clients increases and customers purchase lower cost voice and
texting packages. However, an increased use of mobile VoIP could also lead to an increase
in data revenues, which could be a way for this new calling phenomenon to become
beneficial to operators.

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5 Observed Reaction Patterns of Telcos

Telcos in Europe and the U.S. show quite heterogeneous reaction patterns in dealing with
mVoIP. Reasons are diverse, however, they can be reduced to two common factors.

First of all, reactions depend highly on the particular intensity of mVoIP usage per market.
This level of maturity correlates with factors such as smartphone penetration, mobile
broadband coverage, and the availability of dedicated mobile data services. In markets
where these indicators are still below a certain threshold, telcos often disregard mVoIP as a
threat. They prefer to wait until the usage of mVoIP reaches the point where traditional call
revenues are seriously at risk.

The second factor is the strong correlation between the competitive market environment and
the telcos’ market position among its peers. Incumbents show a tendency to defend
traditional voice revenues by adopting conservative mVoIP measures, whereas more agile
attackers are inclined to adopt more non-traditional strategies. For example, they try to
attract competitors’ customers by offering more modern propositions such as a Skype
partnership (e.g. 3UK).

In accordance with both factors, the market maturity and the competitive environment,
multinational telcos seldom show a uniform approach across all their foreign subsidiaries.

Vodafone: In Germany, mVoIP is blocked in general except for subscribers of the high-
priced tariff(s) ‘InternetPlus (Flat)’, whereas in the UK, OTT VoIP and other P2P services are
allowed, but only for unrestricted data or voice price plans. Additionally, in January 2010, the
UK subsidiary signed an MVNO partnership with the mVoIP provider Truphone.

Orange: Only metered plans allow mVoIP in the UK, whereas mVoIP usage is generally
allowed as of June 2010 in Poland.

O2: Higher-value tariffs allow mVoIP but only for the German market. This is quite contrary
to the approach in the UK where mVoIP is totally banned for consumers. Besides that, O2
UK already started its first trial in April 2010 and also launched an mVoIP service based on
Jajah, a VoIP provider which was acquired by Telefonica at the end of 2009.

Deutsche Telekom: T-Mobile allows mVoIP services in Germany but charges a monthly
tariff for this usage. In the UK, mVoIP works only with the web’n’walk Max plan. On the other
hand, mVoIP is explicitly not allowed at T-Mobile Netherlands.

3 “Three”: In the UK, ‘Skype on Three’ allows Skype-to-Skype calls and chats for free
originated on Three’s 3G network. Furthermore, they offer the ‘3 Skypephone’, which is a
series of 3G mobile phones manufactured with 3 as a partner. Hutchison 3G Austria offers
the ‘INQ’ device which has pre-installed Skype, Facebook, Windows Live Messenger, and
Twitter. Tariff ‘MoreSkype’ allows Skype-mVoIP calls on several types of handsets for a
monthly charge.

Verizon: Since March 2010, ‘Skype Mobile’, the exclusive Skype-on-Verizon deal, brought
Skype to Verizon Wireless customers who are owners of BlackBerry and Android-based
smartphones.

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From these response types, a framework for determining appropriate strategies for telcos to
deal with mVoIP emerges.

Seen as a strict countermeasure, telcos could block mVoIP traffic on their mobile networks
completely to prohibit any substitution of their traditional voice business. This option is not
necessarily a freely chosen strategy but can rather be attributed to regulations within a
country, such as with some markets in the Middle East.

“Doing nothing”, which means allowing mVoIP without counteracting is another way of
dealing with this topic, at least in theory. However, from a realistic point of view, this option
should only be considered once the revenue at risk is calculated as negligible. But
sometimes exactly the opposite is the case: Ignoring mVoIP is occasionally just an oversight.

However, “embracing mVoIP”, which is a strategy that is pushed by regulators rather than
telcos, requires more creativity on the part of the telco. Market analyses have shown that
most of these measures involve adoption of terms and conditions, launch of dedicated tariffs
for mVoIP and implementation of traffic management or something similar.

Bold moves, which comprise the most active option, contain products or services adopting at
least certain mVoIP characteristics. Offering fully developed mVoIP applications can also be
taken into consideration, either as an in-house development or via a partnering model with
an mVoIP provider.

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6 Option Space for Telcos

Within the mobile industry, we found three typical perspectives on the impact of mVoIP. First,
there are those who assume that mVoIP is going to have no significant impact on their
industry at all. As shown above, mVoIP bears many benefits to end users and to those who
make it an integral part of their offerings, making the rise of mVoIP applications almost
certain. Time and intensity of impact will vary by country and operator; however, and even in
markets that seem to have less favorable conditions for mVoIP adoption, we suggest that
telcos closely watch the key market factors and mVoIP usage on their own network.

Then, there is the split between those who focus on the risk that mVoIP presents – and
those who see opportunities. These players can be known as the conservatives and the
renovators.

The conservatives are mainly established companies with medium to high market shares.
Their primary concern is how to manage the risk of revenue loss, arising through a
significant number of users substituting current “traditional” voice usage by third party mVoIP
services, which will first significantly impact international call revenues.

For instance in Egypt, where mVoIP has been banned by the government, it is arguable
whether this is motivated by economic reasons in favor of local operators or by political
reasons. UAE, a country with an extremely high proportion of foreign inhabitants, granted
licenses for the offer of VoIP only to local telco companies, thus keeping out competition by
providers of low-cost international calls such as Skype. Still, in most countries, we assume
that regulators will tend not to restrict the use of mVoIP. Therefore, simply banning such
services will not be a sustainable position.

So, if telcos cannot prevent this revenue loss, how can they control the damage? Allowing
and enabling the use of mVoIP will in many cases require additional effort on the network.
These may and should be charged to those who use these services. Assuming a growth of
the mVoIP user base, a potential mVoIP surcharge would surely decline over time. For
operational implementation, it is critical to start change of terms and conditions early.
Otherwise, customers might be inclined to cancel their contract.

Telcos should use their pricing options to retain usage and revenues: Many operators
already offer special international calling packages. Often, the target group for these
packages lack awareness of these products, so assuring that they are attractive, promoting
them to international callers might already be a first step to prevent substitution and win back
potential mVoIP users. Attractive on-net charges, friends & family style options, and the like
are further options to reduce the cost advantage of mVoIP services.

Most of the above mentioned response options focus on rather reactive moves within the
current business model to limit mVoIP impact by contractual or by pricing approaches.

Renovators might be inclined to try more daring moves: One would be to go and launch a
service similar to Skype’s offering and to compete directly in order to retain market share.
This model might become more attractive as it would also allow to acquire customers that
currently are beyond the telco’s reach. We are skeptical, though, as it requires quite an
investment to launch this service successfully and to make it well known.

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It also generates low ARPU, at least if it relies on break-out calls to generate the revenues.
Unless you already have access to a well-known brand, or the approach matches your
current brand, we do not think that this model can turn out positive on its own.

Another option – instead of focusing on cost – is to apply mVoIP’s advantages of integrating

it into social networks and other features. We are convinced that over time, voice will be just
one of many ways to communicate. Integrating social network services, e.g. presence
services, allowing easy integration of various contact lists, and an interface that feeds
personal and social news, can provide additional value to the users. In the future, the real
value for users will not be to call somebody, but to know when and where somebody is –
which is what we call the “context”. Before, communication depended on the right context
being given. In the future, the context becomes both, cause and content, of the
communication. If operators do not create their own solutions here, they will carelessly give
away a key value to their “over-the-top” competitors.

Renovators, people with the need and will to focus on innovation and growth, might be
tempted to ally with specific OTT players. However, they should be aware that this will most
probably be a rather short-lived exclusiveness, as the partner will strive for further growth
beyond typical network operator market shares. The limited time for partnering then needs to
be used as effectively as possible.

Here, network operators can play a unique role. In our opinion, they can play the “OTT game
on the OTT”. This means building bridges, sometimes even integrating the different
ecosystems that we see emerging, by implementing own applications. As a benefit to their
original customers, network operators should seek ways to release them from the prison of
specific ecosystems and provide choice to their customers.

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7 Play out, Change, or Waste Away

We urgently recommend you examine your local market conditions and understand how
current and foreseeable future disruptive moves by Apple, Facebook and Co. might impact
you. This will help you to understand when and how your customers might churn or
substitute your services with mVoIP.

The key question will be to identify if, on the demand side, market changes will be rather
driven by:
Q arbitrage potential or
Q value creation by new features.

We are convinced that mVoIP, owing to its potential to create new functional value, will
supersede traditional voice calls in the long-term.

Until then, pricing measures will allow you to fend off competition to a certain amount.
Following this path will allow you to develop and launch services that create new, superior
value relying on choice and/or integration of different ecosystems.

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8 The Authors

Clemens Aumann is Managing Consultant in the Strategy & Marketing department. His
work concentrates on national and international projects in marketing and innovation
management for the ICT industry.

Nathan Cao is a Business Analyst in the San Francisco office of Detecon Americas and
works within the Strategy and Innovation group based in that office. His projects mostly deal
with new mobile services, online content strategies and emerging technology strategy. Some
topics he is interested in include gaming content strategies, mobile payments and mobile
advertising.

Rouven Hertenstein is a Senior Consultant at Detecon’s Practice Strategy & Marketing

since October 2007. He has a wide range of international project experiences in T.I.M.E.
markets with a focus on Germany, USA, China, Middle East, Southeastern Europe, and
Southern Africa. In his work he concentrates on the areas of strategic business innovation
and new media.

Opinion Paper 19 Detecon International GmbH

 The Disruptive Potential of mVoIP – Or Just Another Hype?

9 The Company

We make ICT strategies work

Detecon is a consulting company which unites classic management consulting with a high
level of technology expertise.

Our company's history is proof of this: Detecon International is the product of the merger of
the management and IT consulting company Diebold, founded in 1954, and the
telecommunications consultancy Detecon, founded in 1977. Our services focus on
consulting and implementation solutions which are derived from the use of information and
communications technology (ICT). All around the globe, clients from virtually all industries
profit from our holistic know-how in questions of strategy and organizational design and in
the use of state-of-the-art technologies.

Detecon’s know-how bundles the knowledge from the successful conclusion of management
and ICT projects in more than 160 countries. We are represented globally by subsidiaries,
affiliates, and project offices. Detecon is a subsidiary of T-Systems International, the
business customer brand of Deutsche Telekom. In our capacity as consultants, we are able
to benefit from the infrastructure of a global player spanning our planet.

Know-how and Do-how

The rapid development of information and telecommunications technologies has an

increasingly decisive influence on the strategies of companies as well as on the processes
within an organization. The subsequent complex adaptations affect business models and
corporate structures, not only technological applications.

Our services for ICT management encompass classic strategy and organization consulting
as well as the planning and implementation of highly complex, technological ICT
architectures and applications. We are independent of manufacturers and obligated solely to
our clients’ success.

Detecon International GmbH

Oberkasseler Str. 2
53227 Bonn
Telephone: +49 228 700 0
E-Mail: info@detecon.com
Internet: www.detecon.com

Opinion Paper 20 Detecon International GmbH