There’s a bit of an uproar going around about how Vodafone and Orange in the UK are “crippling” Nokia N95s they sell by removing the internet telephony plumbing that allows the use of integrated third-party VoIP services over the device’s Wi-Fi connection. Users can still make VoIP calls through services that have a separate client, but can’t use ones that integrate right into the phone and let users dial from the phonebook and so on.
The fuss is mainly being kicked up by Truphone, providers of the type of VoIP service that can’t run on a Vodafone or Orange N95. Its CEO told El Reg he’ll complain to British telecoms regulators, and accused the operators of contravening European laws.
I’m not quite sure what to make of the situation, and I’ve got some conflicting feelings about things, so let’s try to make some sense of it, then tell me where I’ve gone wrong (or gotten it right) in the comments.
Operators blocking this sort of thing is stupid. But if that sort of stupidity were illegal, the operators would be in jail already. It’s rather pointless to block this stuff, because all it’s going to do in the end is piss off some users. At this point, there aren’t enough people using, or even aware of, these services for any revenue loss to be a concern. Second, the people trying to use these things are savvy users who, if they can’t do something on one operator, will just churn to another — and how is that preventing “lost” revenues? Third, if people want to make cheaper calls, they’re going to do it one way or another. If it’s not VoIP, they’ll use a landline, or a calling card, or a callback service. (More along these lines from Dean Bubley.)
Truphone obviously isn’t a disinterested party. Their agenda here is pretty clear: if all compatible phones have the software required to use their service removed by operators, it’s going to make life pretty difficult for them. So, they whip up a frenzy about the big, bad operators’ anti-consumer policies, and even if they don’t get the operators to change their ways, they’ve gotten a ton of free marketing — even if this particular issue affects only a handful of users. (Keith McMahon has some more talk about Truphone and the size of its market.)
All that said, if operators want to remove the VoIP capabilities, let them. As I said above, it’s a move that will backfire in the end. But at the same time, I can understand how they’d see a company like Truphone as leeching off the subsidies they pay out on mobile devices. These companies depend on operator subsidies to get high-end devices which can access their services into the hands of potential customers cheaply — and then they want to sell a service that directly competes with the operators’ core offering. That would probably upset me, too — though my reaction wouldn’t be to try and block their services. To suggest that operators shouldn’t be allowed to determine what’s included on or left off the handsets they sell will hasten the end of operator subsidies. And as much as people love to get worked up about operators “crippling” devices, they love the cheap handsets subsidies provide even more. If they didn’t, the reaction to this sort of story would be “fine, I’ll just pay more and get the unlocked, SIM-free version.”
For me, this is an issue of disclosure. Operators and retailers should openly disclose the specs of the devices they sell. Should this mean they have to make it clear what functionality or applications they remove? I’m on the fence about that, but I think as long as they make some detailed specs listing the features the devices they sell do contain readily available, it shouldn’t be a problem. However, judging by the listing for the N95 on Vodafone’s web site, they’re not doing this. I think a useful example could be how cars are advertised and sold: manufacturers’ advertising plays up certain features, which are often options. Not every model features those options, but when you go to a dealer, it’s made very clear which features a particular car does have. Conversely, the window sticker doesn’t say “This car does NOT have…” and list all the options it doesn’t have.
I think that more transparency and better information for consumers is something that we can all get behind, but to imply that operators shouldn’t be able to change the devices they see fit is a step too far. As I said, doing so endangers subsidies — but it could also see handset vendors start selling dumbed-down handsets to all their carrier customers, leaving out features from unlocked versions as well so operators wouldn’t fall foul of “anti-crippling” laws.
Hi Carlo,
A good post - as you note, there has been a lot polarised opinion. But to put it in context, the fuss/frenzy to which you twice refer has been self-sustaining: the issue has clearly touched a nerve.
It’s also true to say that Truphone is not anti-subsidy, but it is against subsidy abuse. You can see a relevant view from Truphone here: http://www.ccnmatthews.com/news/releases/show.jsp?action=showRelease&searchText=false&showText=all&actionFor=647239
I’ve seen some interesting analogies for the subsidy model - notably the one that likens subsidies to a loan, in that you commit to repay X pounds per month for 18 months. I can’t help thinking, though, that this is the only loan I can think of whereby, having had the ‘loan’ repaid after 18 months, the lender then continues to take ‘repayments’ at exactly the same rate until the ‘borrower’ notices!
Tim.
Tim - A contract you get from an operator isn’t all about the subsidy, it’s also about the package of calls/text/data you get as well.
To get the device for a cheap initial payment or indeed for free, you tie yourself to a high monthly payment which includes a large amount of free minutes/texts/data. However on a 12 month contract you are only tied to this rate for 6/8 months after which you can change to a lower monthly payment if it suits you. So to me that means the subsidy part is done after 6/8 months and the rest is just the user paying for their connection package.
As for payments continuing after the contract is over, well that was part of the contract that the user signed in the first place and is no different to a gym membership or a Sky contract or a broadband contract. The user is still getting the service after all.
At the end of the day I look at it like this: If I have a sim-free phone already and want a contract sim to use in it, I still have to sign on for 12 or 18 months and pay a similar (if not the same as I’m use my phone a lot) monthly payment as those who got a phone for free or for very little. Even though that might not be fair it’s still a hell of a lot cheaper that if I were using a PAYG sim.
[…] Operator-disabled features : Orange and Vodafone in the UK have disabled some features, to prevent SIP use, and prevent 3rd-party VoIP apps (which support SIP) from integrating with other features. This is at odds with their advertising, and UK Trading Standards and OfCom are getting involved. The Truphone video [via Andy Abramson] explains some of it. I want to try other VoIP apps …and to use wifi as the bearer, when available, not be forced to use cellular by the operator. (I’d prefer not to pay the upfront cost for a SIM-free version, nor switch from Orange). […]
really good post and very balanced view however, you missed one important facet of the argument.
networks wish to block the service.
if they wish to go down this route, be transparent.
AND then be forward thinking and offer a service that comparable in quality and innovation incl value for money and play the voip operators at their game.
thats the way to do it and i think thats where they have messed up.
its almost as if they want to keep a nation of dumbed down mobile users in the sweaty palms of user compliance and not want to encourage and invoke 3G / Data usage - I mean …… they did all pay millions for the 3G licences, which seem to be all going to waste.
the goverment made a pretty penny and is laughing all the way to the bank, unlike the operators who are still trying to find money to even begin to scrape back !
lewis
Thanks for the detailed coverage on this subject. VoiP is going to reduce mobile costs — and any other phone costs. Any phone company blocking this will regret it as my feet will go where the costs are cheaper. Better the phone company gets something instead of nothing. Your site is a definite read for those who read my blog. I will recommend your site any time.
i just recieved a new hand set, debranded it and i’m happy. I guess those who want voip services can access them eventually and those who don’t won’t. You can always change network. I like orange, and my n95.