Apple Facetime looks like its going to be another in the series of video communication applications that are proving to be more successful than the mobile industry’s attempts at video telephony, which began at the turn of this century and unfortunately have changed little since.
Skype was the first video communication service to hit mainstream. For a Granny to see their grandchild, a parent on the road to chat with their kids, or for a long distance relationship video communications has significant value. There are barriers to entry: a PC / laptop with a web cam is required at both ends, and Skype must be downloaded and installed. But those barriers are becoming minimal, especially as video telephony is focused on closed user groups, generally families or people who really want to see each other.
Apple Facetime is in a similar category for those growing millions with iPhone 4G customers, they can now add Facetime to a call. With Facetime the voice call goes over AT&T’s network as usual and it puts the video part over WiFi. Unfortunately AT&T’s pricing plans for data are not very customer friendly, $15 for 200MB, or $25 for 2GB, such negative pricing only encourages people to avoid using AT&T’s network and instead rely on WiFi from their phone. In the US Facetime is likely to be adopted as family plans are very common and if the parents are getting iPhones try telling the kids they can not. The other factor is WiFi is in home, in the office, at friends and customers, on trains and lounges; its just rude not to have WiFi available where you’re asking people to visit. So the networking effect, connectivity and charging issues are potentially solved, though not elegantly, but that’s the history of the internet.
Then there’s the final issue and one dear to my heart – presence. Knowing the other party can take a video call. This was never addressed in operators’ attempts at video telephony, and even today RCS (Rich Communication Suite) appears a pipe dream thanks to its dependence on IMS (IP Multimedia Subsystem). Apple Facetime uses presence, if both parties can Facetime, then its available as a call option on the screen so the voice call can be upgraded to a video call with just a tap. Presence is critical for video telephony, video calls are only ever going to be a small % of calls. Even in the enterprise video remains niche, much to Cisco’s dismay as more video = more router sales. Video comms is generally used for board meetings, big formal presentations, but for 99.9% of meetings voice and email, with possibly a whiteboard session if you don’t want people to have the slides, is perfectly adequate.
When Skype adds video capabilities to its iPhone (and Android) apps this adds an interesting new dimension. We’ll likely see Apple and Skype play nice, as for Apple it just adds customer value to have more video-capable end-points. And when this happens it provides further direct objective evidence on the encroachment of OTT (Over The Top) services into operators’ core value added services.
The operator business model needs to change, charging per service upfront doesn’t work for services except voice and internet access. My carrier collects $100+ per month from me, the carrier should be bundling a load of services including video telephony in that fee. Operators must look at their total customer offer, not per service. Using total customer value enables Apple to invest in creating Facetime, even though its not generating any service revenue for Apple, instead delivering customer value and is a tool to differentiate as ‘there’s an app for that’ is getting a little old.
Once Facetime takes off and plays nice with Skype operators will have lost a significant piece of the video service pie that 10 years ago they thought they would dominate. Operators must change how they think about their value proposition to customers. Ad-support is part of the solution, but its not an answer as I’ve discussed many times in this weblog. The change is from a myriad of poorly communicated services with confusing upfront charges, to compelling bundles of communications services relevant to me – because as my carrier you have the potential to know me better than anyone else.