Can pure-play mobile VoIP succeed?

[1]Two recent announcements regarding pure-play mobile VoIP offerings from TCM Mobile and xG Technologies caught my eye, and I decided to talk to the companies to find out about their plans to make these technologies commercially viable.

TCM Mobile launched a mobile VoIP test network [2] in Syracuse, N.Y., after more than four years of development. TCM plans to operate in the unlicensed 2.4 GHz spectrum band to avoid the costs of buying spectrum, as Verizon [3], AT&T [4] and others [5] have done. The company, founded by a group of Israeli engineers and scientists, said it cracked interference, roaming and connectivity problems in development and built all components of the network, from handsets to base stations, in-house. It plans to operate the mobile voice network over an IP backbone to reduce costs further.

But, as Carl Weinshenk at IT Business Edge points out [6], despite innovative technology, TCM will face tough competition making its solution work in the market.

Weinshenk writes, "The problem facing TCM, no matter what the elegance of their technology and efficiency of their execution, is that they are in a competitive space in which many powerful players already have made significant investments and chosen their dance partners."

TCM President Haim Yashar told me the company does not have consumer plans or a business model yet, and that TCM is "a tech company at the end of the day." Given the competition Weinshenk aptly notes, TCM has its work cut out for it to achieve any sort of market penetration.

xG Technologies also has developed its own end-to-end solution in-house, called xMax, but company CTO and co-founder Joe Bobier said there are significant differences between xMax and TCM's offering. He said he couldn't speak to the underlying technology behind TCM's system, since he hasn't tested it, but he said it's basically an enhanced WiFi system that is not truly "cellular," like he said xG's solution is.

Bobier said xG also built its entire solution in-house, and that xG "has developed all layers from the physical layer up, avoiding the pitfalls of WiFi platform architecture, such as latency, which have plagued WiFi and WiMAX voice applications to this point."

Townes Tele-Communications, a small iLEC based in Lewisville, Ark., just finished its first phase of due diligence [7] testing the xG xMax system, and the tests went very well, according to Townes general counsel Ben Dickens. He said the company wanted to begin offering mobile services to its local customers to compete against triple- and quad-play options, and it decided to test xG's solution after finding other offerings too expensive or technically insufficient. If the tests are completed satisfactorily, Townes wants to explore the option of pulling together regional iLECs to create a nationwide mobile VoIP network with the xMax product.

Without being able to test either solution, it's difficult to draw conclusions about their long-term potential for success in the U.S. market. The Townes deployment will be a bellwether for xG's prospects to take xMax nationwide, and TCM may be able to leverage its Syracuse deployment into partnerships or an acquisition. The technology developments made by both companies are impressive and worthy of recognition, but until they add customers and prove they can compete with the entrenched incumbents, the jury remains out on these pure-play mobile VoIP offerings. 

- Pete [8]