Video Conferencing: An Enormous Opportunity for Operators

By Andrew Sviridenko

How much money can operators make on VoIP when Skype and Google are practically giving it away? A lot — on video conferencing.

With Google and Skype practically giving away VoIP services these days, traditional operators are reluctant to market widely their own competing VoIP services to prevent cutting their existing old-fashioned revenues. Operators sure want to protect their lucrative traditional voice minutes business, as long as they reasonably can, but with the recent Google and Cisco moves it seems now time is running out.

With the positive FCC Net neutrality decision in 2010, now the road is open, and popular VoIP providers like Google, Cisco-Webex, Skype and Microsoft are jumping on the bandwagon in a big way, competing against the traditional voice operators in the U.S., Europe and Asia.

But the business potential for traditional operators to roll out their own, branded paid multi-point video conferencing over IP services is enormous, and given the recent media buzz of practically free VoIP from Google and Skype, video over IP could be the way for traditional operators to significantly increase their ARPU, promote their brand and retain their customers, rather than losing them to multiple VoIP players who are getting stronger each day. The difference is that video conferencing over IP is not free at all, while VoIP is not a huge money generator.

Most of today's video Web conferencing providers like Cisco, Webex, Adobe and Microsoft charge significant monthly fees for their service and compete with today's traditional operators, who have huge governmental lobbying muscles.

With licensing white-labeled and massively multi-point video Web conferencing products like SPIRIT's VideoMost, a server-based, central control point solution targeted for the operator market, traditional operators can offer their own branded HD, multi-way video conferencing over IP services to their customers (bundled with their Internet access service), and satisfy their customers’ growing need for quality voice and video IP communications and high-speed access, while increasing ARPU and maintaining customer brand loyalty. 

These services can not only be targeted to consumer customers, but most importantly to small-medium business and enterprise customers, who represent the main revenue generators for operators.  For example, an operator could charge $33 per month for their own branded video and voice conferencing service, give the video conferencing software away for free, and bundle the video conferencing service with their internet access service — leading to low sales and marketing overhead costs on the conferencing offer. As Internet-provider customers use the operator-branded video conferencing service, they will naturally buy more bandwidth and more pipe from the operator to conduct video conferencing. A central control point solution allows operators to monitor, administrate, record and supervise the service. And the operators can provide a single bill for both Internet access and video conferencing, convenient for subscribers.

For example, KT, formerly Korea Telecom, a telecom industry giant serving over 90 percent of South Korean's wired and wireless subscribers and leading the Korean VoIP expansion efforts, launched a SoIP strategy (services over IP). The SoIP strategy, powered by SPIRIT's technology, integrates VoIP and multimedia to provide KT customers with video calling and data transfer as well as voice over IP, as a differentiated premium service. KT’s SoIP strategy is a high-end lifestyle system for both business and end-user customers with a variety of customizable interactive services.

Video conferencing infrastructure is expensive, and Skype has an edge with its P2P architecture, that loads the processing on the customer's PC or Internet device, rather than on a central server farm. However, P2P architecture is a security problem in an enterprise, as it forces passing other people’s information through the corporate network, which is not acceptable to most IT and system administrators. Operator server-based and controlled architectures are secure but expensive. Operators need a massively scalable software video server that processes up to 1,000 simultaneous HD video channels on a standard $4,000 PC server, allowing a 10,000-person organization to use just one $4,000 PC server for all its video conferencing needs. This is possible though innovative software and the use of a scalable H.264SVC video codec standard.

In order to compete against VoIP software and internet giants, traditional voice operators can offer a high-quality, HD, high QoS, scalable IP communications service (bundled with their internet access) to maintain customer loyalty, reduce churn, increase ARPU and answer the growing demand from their customers for quality voice and video over IP communications capabilities that integrate with websites and other applications.

Andrew Sviridenko is chairman and founder of SPIRIT DSP, a global voice and video over IP engines provider. Andrew can be reached at Andrew@spiritdsp.com.