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Mobile & Wireless
Truphone Aims to Shake Up the Mobile Sector
WiFi Will Disrupt The Cellular Business Model, Says CEO
by Ken Wieland
UK-based Truphone, which enables mobile VoIP calls over the
internet via WiFi, represents a new breed of operator that is
going to shake up the stable (and very profitable) world of
cellular operators.
At least that’s the prediction of James Tagg, Truphone’s
founder and CEO. “WiFi is a disruptive technology, allowing
new entrants to offer new services and different voice tariffs,”
he says. “This will affect mobile operators’ market share and
ARPU.”
Tagg is clearly not alone in this belief. Earlier this month,
Truphone announced that it had managed to raise US$24.5
m of VC funding (Wellington Partners, Independent News &
Media, and Burda Digital Ventures).
The cash injection should help Truphone, among other things,
expand the number of handsets that its software is compliant
with. So far, only mobile users in possession of either a Nokia
N-Series or E-Series smartphone can use the Truphone
service. Tagg expects that by the middle of this year his
company’s software will be compatible with smartphones using
Microsoft OS.
“Since launching service last September, we’ve managed to
get a few thousand subscribers, spread across the US [40
percent], the UK [40 percent] and the rest of the world [20
percent]” says Tagg. “Given the stage of maturity we’re at for
WiFi and our company, we’re happy with this level of response
at the moment.”
By his own admission, Tagg doesn’t pretend that all the
service glitches have been ironed out and he describes the
company as still being in beta phase. He expects by this
summer, however, that Truphone will be up and running with
a full-blown commercial offering.
But for those who can successfully use the service today, it
promises to drastically reduce the monthly mobile bill. There
is no monthly subscription and calls between private WiFi
hotspots located anywhere in the world – where both the caller
and the called party are within reach of an access point – are
free. And for Truphone calls that terminate on other countries’
landlines or other mobiles around the world, the company
offers what it describes as ‘cheap’ VoIP rates.
To attract more customers, Truphone is currently running a
promotion until the end of March this year where calls to
landlines in 40 countries are free.
For public hotspot access, Truphone has a deal with The
Cloud to facilitate mobile VoIP calls over its UK network of
7,500 WiFi locations. Calls made from The Cloud network are
charged at 3p per minute above Truphone’s standard VoIP
rate to mobiles and landlines in different countries around the
world.
“We have a revenue-sharing agreement with The Cloud that
enables us to get a gross margin of between 25-50 percent
[on the 3p per minute charge],” says Tagg. “We’re in the
process of securing more deals with other public WiFi hotspot
providers around the world.”
By the middle of this year, Tagg expects to have completed
an MVNO agreement with a mobile operator in the UK. This
will enable Truphone to offer one bill to its customers. “We
won’t call ourselves an MVNO, though, but a Mobile Internet
Network Operator,” says Tagg.
Once Truphone secures its MVNO deal, Tagg says it will
develop data services around music and video to increase
monthly ARPU to the £50-£100 (US$98 - US$197) range – the UK monthly
average across cellular operators is around £23 (US$45). “The ARPU is
higher because of the high-end customer segment we are
currently aiming at,” says Tagg.
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