The Vault

John E. Dunn

Skype swoops, Truphone in trouble?

There's plenty to admire about VoIP -on-mobile startup Truphone, but you wonder whether the company hasn't got a fight coming now that winged predator Skype has landed on its patch with an ugly thud.

The first sign of trouble brewing was a near daily barrage of announcement from the company in recent weeks, culminating with the news that Truphone was now offering a series of upfront call packages as an alternative to its previous complex weave of tariffs.

Good, about time too.

The surprise is that it's taken the arrival of Skype to coax Truphone into doing what they should have done a year or more ago, offer call packages for a flat rate. For instance, a very reasonable $17 (£12.50) per month gives the user unlimited calls to landlines, plus mobiles in countries such as the US and China, as well as cost-free calls to Truphone, Skype and Google Talk.

In case you don't grasp what Truphone does, it has been a pioneer of voice-over-IP calls on the one platform that has so far resisted the lure of the technology, mobile phones, partly using Wi-Fi to remove the need for local mobile cells (it also has a low cost routing technique that uses conventional cells, but keep the call off the cell network as far as possible). It works across a range of platforms, including Nokia, Blackberry, Google's Android and even turns the iPod Touch media player into a voice comms device.

The benefit of VoIP on mobile is much the same as with landlines, except that the savings can be larger because the call charges are much higher, especially when roaming across borders. Mobile phone companies fear this technology for obvious reasons, and have apparently been upset enough to use political muscle to restrict Skype to Wi-Fi-based calls only.

On the upside for Truphone, Skype has yet to find an economically viable model to route calls without involving the mobile networks for the local haul, probably because there isn't one with zero cost. Here, it faces the same limitations as Truphone. It's unlikely that the networks will face any serious competition from least-cost routing until Wimax or open-access 3G comes along and offers another way of moving the data on to the backbone.

But let's remember that the lesson of Truphone lies in its agnosticism, allowing users to interact with any one of the leading IM clients, for instance, including AIM, Google, MSN, Yahoo and Skype itself. If Skype comes to dominate the market, it's hard to see such openness surviving because that isn't the Skype way.

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