[Why is that that voice, the only ‘killer application’ making up the lion’s share of revenues has seen hardly any innovation? Andreas Constantinou looks at the developments underpinning a new trend; voice as a platform for innovation]

It is no secret that voice ARPU has been on a downhill slope for a very long time; per-user voice revenues have dropping at an alarming 5% annually over the last 5 years. Yet operators have been hoping in vain that data services will over-compensate for this decline. They haven’t.

Fortunately, a new wave of innovation is taking shape, with voice is becoming a new platform for building services and revenues. Yet, operators need to face their worst fears (read VoIP) before they can learn how to use their data networks as a means to reinvent voice for the 21st century.

Voice innovation behind the scenes
This article comes as an accidental discovery and a personal Eureka moment. I attended the excellent Emerging Communications 2009 conference in San Francisco, where I found the beliefs of the mobile industry confronted by the fast-paced, brimming-with-innovation world of the Internet and the restless, open minds of the Bay area. If there was one theme for the conference it was voice as the new platform for innovation.

Perhaps the most pivotal announcement of the conference was Skype’s pledge to release its signature Silk codec for zero royalty. Silk is the wideband codec used in the latest version of Skype and has proven performance/bandwidth benefits (based on Skype’s benchmarks) on both networked and wireless environments. I expect Skype’s announcement to gradually reverberate across the voice communications industry in the next few months. It will spell trouble for the voice codec providers (e.g. Microsoft, VoiceAge and Global IP Solutions), but will also improve quality and interoperability on Skype and other VoIP platforms that span mobile and PSTN worlds. See also this review comparing Skype for Asterisk and Skype for SIP, initiatives which are both instrumental to opening up the Skype network to cloud telephony innovation.

Wideband (high quality) speech looks set to arrive via the PC space into mobile; the latter has been suffering from the limitations of the GSM 3.5Khz narrowband codec. It takes some sibe-by-side comparative listening of wideband and narrowband speech to understand how poor our beloved GSM quality is.

The eComm 2009 conference has also set the stage for many showcases of voice as a platform for innovation:
- Skype now offers voicemail transcriptions over SMS (although poorly executed – see analysis)
- Companies like Voxeo, Adhearsion, IfByPhone and Ribbit allow developers to develop connected telephony applications on smartphones and the web; in effect opening up cloud telephony to a wider audience of mobile developers and applications beyond the traditional mainstay of the enterprise.
- Fonolo allows ‘deep dialling’ into complex IVRs through a simple web interface. The service renders horrid customer support IVR menus into a webpage of menu nodes where the user can click and get connected.
- VoxBone offers incoming direct PSTN-to-VoIP numbers in 4,000 cities and 50 countries
- A growing crowd of VoIP providers (Skype, Fring, Truphone, Gizmo5, Nimbuzz, iSkoot, Yeigo, Terrasip, Mobivoip) are trying to push their applications despite the headstrong resistance of the mobile networks.
- Visual voicemail has come into the limelight thanks to the iPhone, even though it has existed as a service with Comverse back in 2002. The Visual Voicemail market is now supplied by Silent Communications, Acision, Comverse, Hullomail, YouMail, and uReach.

Voice Instant Messaging
Perhaps the innovation that’s most likely to create an impact to end users is voice instant messaging.

‘Hold on’ I hear you say… this sounds too much like push-to-talk (PTT), a service that has met with success with Nextel/Motorola but has failed miserably everywhere else. Why is voice instant messaging likely to succeed where PTT failed ?

ABI’s Mark Beccue suggests that push-to-talk (PTT) has failed because most operators have not realised PTT is a business application.

I beg to differ. The reason for the failure of PTT is that it is network-centric, and standards-driven. As such PTT has created insurmountable barriers to entry, as it has to be supported by both network and all the devices in order to work – plus it has no chance of working across network operators/carriers as a result. Add to that the fact that operators have seen PTT as a cannibalisation threat to SMS and pressed hard on the breaks.

Fortunately, a new breed of companies such as Palringo, RebelVox,  Kodiak Networks and Push to Talk Ltd, is helping reinvent PTT as Voice Instant Messaging (aka voice SMS). [updated: Sony Ericsson Research has also released a voice messaging client called Hanashi.nu]

The use case is pretty similar to PTT; sending instant voice notes as a more expressive means of communication to SMS. Indeed, with voice instant messaging the communication medium is much more nuanced and expressive than SMS, while avoiding the calculated and intrusive characteristics of live calling.

At the same time, the technology (and hence commercial implications) of voice messaging are very different to PTT:
- a voice instant messaging application on the device communicates via IP to any other equipped terminal. S60, Android, Sony Ericsson JP8 and iPhone devices can support such voice instant messaging applications.
- The network is the IP bearer, not the gatekeeper. Cross-network interoperability is a given, by design.
- Flat rate data has become the norm in most networks, ticking off a critical success factor for voice instant messaging.
- The intelligence is on the handset, allowing messages to be sent and received even when coverage is intermittent. User experience matters.
- The operator can still monetise through per-voice-message fees, through distribution agreements and billing mediation. The operator can also offer extend services such as routing the voice message to voicemail if the handset is not yet enabled, and therefore offer an even more powerful service distribution & discovery asset to secure its role within this new market.

More importantly, voice instant messaging can act as a revenue booster for mobile operators. The extension of the per-message billing model is straightforward, and asynchronous messaging is a clearly different means of communication to circuit-switched, live voice. Complementarity, not cannibalism [Updated: Solaimes, a PTT technology provider, offers some innovative examples of using voice messaging services in mobile CRM - see comments].

An even more advanced twist to voice instant messaging is the technology being pioneered by RebelVox, which fuses the boundaries between spontaneous voice messages and live calls. Thanks to what the company terms ‘audio time shifting’, the technology allows you to fast forward through a voicemail message and join the caller as she is leaving the message. Or fast forward through a recorded conference call by only listening to one person’s thread.

Perhaps the most inspiring new forms of voice innovation were described by Martin Geddes of BT at the eComm 2009 conference (see Martin’s recorded presentation); imagine a customer support service which drops you a voicemail message in response to your query (especially critical when you are roaming or when the call center is closed). Or warning the caller that the recipient may not want to be disturbed when their phone is on silent.

What’s more interesting is in how BT and other operators (Orange, Vodafone, O2) are opening their network APIs to third party developers in the form of Network-as-a-Service (see our earlier analysis of the NaaS market). Cloud-based telephony APIs combined with network-based subscriber intelligence and device-based voice messaging will lead into trully innovative new applications. However, for that to happen, mobile operators need to face their worst fears (read VoIP) and appreciate how voice over the data network can really complement, rather than cannibalize their traditional services (pretty much the same learning experience that operators went through with WiFi).

The future for voice is certainly bright.

Looking forward to your comments,

- Andreas
twitter: @andreascon
(while on the topic of market trends, make sure to check out our hugely successful Mobile Megatrends 2009 series. Full presentation below.)