My Photo

Ordering Information

Tomi on Twitter is @tomiahonen

  • Follow Tomi on Twitter as @tomiahonen
    Follow Tomi's Twitterfloods on all matters mobile, tech and media. Tomi has over 8,000 followers and was rated by Forbes as the most influential writer on mobile related topics

Book Tomi T Ahonen to Speak at Your Event

  • Contact Tomi T Ahonen for Speaking and Consulting Events
    Please write email to tomi (at) tomiahonen (dot) com and indicate "Speaking Event" or "Consulting Work" or "Expert Witness" or whatever type of work you would like to offer. Tomi works regularly on all continents

Tomi on Video including his TED Talk

  • Tomi on Video including his TED Talk
    See Tomi on video from several recent keynote presentations and interviews, including his TED Talk in Hong Kong about Augmented Reality as the 8th Mass Media


Blog powered by Typepad

« Preliminary Projection for Full Year 2011 Smartphone Market Shares, and Q3 and Q4 performance | Main | Join Us for Free on Real Time Tweetchat forum discussions about mobile marketing with Paul Berney of MMA on 20 Sept »

September 13, 2011


Øyvind Mo

Interesting article, Tomi. In particular the numbers giving some perspective as to how important revenue from voice and sms still are.
Lee - I see your point, but although you are right about there being existing options for installing and using Skype over most mobile networks, I feel you are missing Tomis point: the carriers do NOT wish to encourage nor accelerate any increase in the adoption of Skype. (There is a significant difference between: "pre-installed and actively encouraged" and "there's an app for that"). And the negative sentiment of the operators can be expected to translate into a less than preferential treatment of WP and of Nokia phones.
Even though "the horse has left the barn", as you say, the speed at which the horse is moving is highly relevant to carrier's profits over the next many years. The fall of the Roman Empire took more than 300 years. The Spanish Empire took slightly more than 70 years to tumble. Nokia seems to lose it's "empire" in less than one year... If you were managing a network carrier, why, oh why should you choose to accelerate the adoption of Skype, or support the organizations affiliated with it? Would you do "an Elop" because it's plain to see that your business model has no future, so better take all losses as quickly as possible, or would you tug it out like a roman and keep trying?


If this is true, it certainly isn't good for Windows Phone/Nokia, but it will be a short lived victory for the carriers. Defending a model of artificial scarcity is not viable long term. If it's not Skype, Google Voice will fill the void. The carriers should be doing two things: 1) Price data to benefit from VOIP, esp. video calling (we've had a couple of uh oh bills on our iPhone due to Skype usage on some long video calls). 2) Encourage and foster VOIP competition to prevent one system from being ubiquitous. IM could have superceded SMS for a lot of users if they wouldn't have spent so many years actively preventing compatibility. SMS (like regular voice) is universal.

Some Name

In addition to what Øyvind Mo said: maybe iOS and Android were gradually supporting Skype, but the carriers could not really hit these 2 rising stars, it's far more easy to hit Nokia when it's down.

James Barnes

Why didn't you mention the Verizon Skype business relationship? Verizon is the second largest mobile carrier in the USA, not an insignificant partner by any means.


All those reasons why carriers might hate Skype and maybe even hate Microsoft might be true. But as Lee just said - the horse has already left the barn. So they are already accepting Skype (it is available and working quite often via their 3G networks, and always via Wi-Fi) on every smartphone they sell. Everyone who wants it can easily get and use skype. And carriers will soon be embracing it and looking for way to make money with it. Just like the biggest U.S. network - Verizon - did years ago. With Verizon on board - is it really "the bigger you are the less appealing Skype is"?

Regarding Nokia and Skype - they had it available for older Symbian phones for years. Yes as a separate app, but anyone could get it. For its next generation devices - Nokia had the best native Skype integration of any smartphone in N900. It is the best Skype integration with phonebook and other functions I have ever seen and it is still better then anything Android or iOS have to offer today. That integration was architectural in Maemo and was most likely migrated to Meego. So that huge potential blockbuster phone N9 that Elop killed will probably come with the best Skype integration in the industry. Shouldn't that affect potential N9 future if carriers hate Skype so much?

Did Samsung decide to push Bada at the expense of Windows Phone? Are you sure that was not at the expense of Android, because Google bought Motorola and Samsung decided to invest more into its own software? Or HTC considering WebOS is not because of Googolora, but because of something Microsoft did? Holding a worldwide product launch events, in 4 international locations at once, to announce the first WP Mango phones (on Sept 1 HTC Titan and Radar) does not really sound like HTC is cooling off towards Microsoft. Last year HTC used the similar early September launch event to announce 2010 Holiday Season Android flagships. This year they used it to announce their WP flagships.

And about that carrier boycott? According to Wikipedia - "A boycott is an act of voluntarily abstaining from using, buying, or dealing with a person, organization, or country as an expression of protest". Translated into current carrier/Microsoft relationship it should mean that carriers will not accept Widows Phones into their inventories, will not promote them and will certainly not subsidize them.

So how come AT&T announced 3 new subsidized Windows Phones yesterday? How come HTC Radar and Titan are already available or will soon be available (subsidized) for pre-order on Orange and T-Mobile in Europe? Are these really the signs of boycott?

John Phamlore

The war between Intel and the US carriers started at least by 2002 as detailed in articles such as Businessweek's "The Road to WiMaX"

Something that should be emphasized is that with the United States almost non-existent regulation, the carriers are allowed to compete in both landline and wireless markets.

Intel with WiMaX attempted an end-run around the US carrier monopolies. This and not Skype is in my opinion what the carriers saw as their existential threat in the coming decade.

Observe the Businessweek article clearly articulates Qualcomm as the real threat to WiMaX and therefore the natural ally of the carriers who otherwise might not appreciate Qualcomm's IP tax.

What we appear to have currently is an alliance between the two largest US mobile carriers with Apple, Qualcomm, and yes Microsoft in some fashion. Obviously these companies interests do not completely overlap and they sometimes can still damage each other in other areas.

The fear of WiMaX explains why Apple has been able to negotiate deals with the US carriers, because Apple's mobile offerings, as distinguished from their Mac computers, are ARM-based. What Apple's iPhone and iPad have really done has been to totally kill off Intel's proposed "mid" mobile device category. (Observe that Intel has recently declared it is sinking $300 million into Macbook Air competitors but that the PC makers are saying they only plan to ship 50,000 units. The PC makers know who is going to win the struggle with the US carriers deliberately pricing tethering of Intel devices beyond the reach of consumers.)

Considering that Microsoft's Windows Phones 7 at first only ran on Qualcomm chips and that Microsoft is porting Windows 8 to ARM, I wouldn't count out the possibility that some surprise deals will be made putting Nokia Microsoft Windows Phones on US carriers are relatively attractive terms.


The problem for the carriers, of which Skype is just an example, is that everyone is figuring out just how out-dated and uncompetitive their pricing models are. Having networks that can now handle lots of data relatively cheaply is a game changer.

Take Skype and assume $0.05/MB. You can get 5-10 minutes of calling with 1 MB of data, which works out to 1/2 to 1 cents per minute. True, Skype/VoIP calling is not as reliable as regular wireless voice calling, but I do not think that justifies such high price differences. And as data rates go down, the difference will be more pronounced.

The numbers are worse for SMS. With a MB of data, I can send the equivalent of over 7000 SMS messages. No wonder BBM is never a cheap add-on. And if the carriers are so worried about Skype, how must they feel about iMessage?

John Phamlore

To see how the real cause of Nokia's downfall was their executives decisions to listen to fellow Finn Linus Torvalds in the early 2000s, simply read the following article "Android, forking, and control" at

Here are some choice quotes about the Linux developer community from the accompanying comments to the above article:

"Nokia did everything the community told them to, and lost big."

"... over five or six years ... They gave the GTK/Gnome world a long enough chance to produce something decent ..."

"At a certain point, it's easy to get the impression that your time is intentionally being wasted by people who have no interest in ever accepting your work."

In my opinion, Nokia allied with Intel only because Linux was born on Intel and a Finn started Linux. Intel never delivered the mobile chips with a small enough power draw. Nokia set their own house on fire by obsoleting what was to become Symbian and declaring they were moving to Linux, for which there was no reason to transition since Intel simply cannot produce x86 mobile phone chips. Nokia angered the US carriers by three times allying with Intel over mobile television and over WiMaX.


One of the main reason why Nokia starts Meemo/Meego was only a trend. In fact that they want to have a second foundation similar to Symbian in the beginning of smartphone business.

But Intel was a totally wrong partner since they don't care at all about mobile devices and in addition with that, no one interested in Meego which makes it as "no future" mobile OS compared to Android.

Meego, sad but true...

And Skype, who doesn't use Skype? Soon or later voip will be a standard in mobile phone.

Mikko Martikainen


Very interesting numbers, and the only conclusion I can draw is that the Microsoft + Nokia + Skype strategy is going to be a tremendous success in the long run. Your own numbers prove it: no carrier stands a chance against potential 2 billion users. The iPhone started the disruption of the carrier business, one could argue, and it is only accelerating: iMessage, Google Voice, and now the ultimate blow, Skype. No amount of boycotting is going to change the end result, and one by one the carriers will come to the same conclusion and cave in.



Where I live in the Netherlands. T-mobile charges 1 euro per 1 MB of data on prepaid plans so you might want to multiply your assumption by a factor 20. For postpaid plans they have a different trick, they give you 'units' that can be used to either use up a Minute/sms/mms/MB.

And don't think the other Dutch carriers (Voda & KPN) are different because they've all changed their subscription plans this summer in *lockstep* to mitigate the loss of revenue from Skype and Whatsapp.

An executive from KPN (the market leader) said the migration to smartphones in the Netherlands outpaced e.g. Germany and therefore they had to change their subscription model here and not *yet* in Germany.

As Tomi illustrated this is about BIG money. The companies raking in these big buck are NOT STUPID. Don't be fooled they will let themselves be marginalized by some nifty workarounds circumventing their pricing plans (e.g. 1MB = 10min). In the Netherlands they effectively form a cartel of 3, prepaid you pay about 10c per voice minute: they have pricing power. This price is not determined by the 'real' costs of carrying those voice bits over the network but by their pricing power.

Tomi's argument basically boils down to: Skype threatens the pricing power of the carriers hence they will oppose Skype every way they possibly can and get away with.

As a consumer I might not like this but from a business perspective this is a perfectly logical reaction from the carriers. Don't let your preferences as a consumer cloud your analysis of the situation. As a consumer one might perceive the carriers as 'the bad guys' so instinctively one tries to come up with arguments leading to the bad guys losing. This is bad science, just imagining arguments leading to your preferred outcome.

If you want to refute Tomi's argument come up with reasons why the carriers would want to embrace Skype, i.e. show how Skype will make them more money instead of cannibalizing their revenue streams.


the Carriers could hate skype, but they can't stop consumer using it.

There is no reason Carriers hate Nokia for Skype, on youtube there was a lot videos Android phone showing using skype -- even at that time they didn't really work well with skype. Iphone user also use skype.

Looking forward Nokia bring Skype function, it is a pity Nokia couldn't work with skype well.



Originally they wanted to throttle or block apps like whatsapp (bbm clone) and skype and charge for allowing the use of these services. This ran into legal issues and caused political controversy. It turned out the carriers were packet sniffing customer data traffic to keep an eye on the usage of these apps.

The current approach by e.g. KPN the market leader is to just bundle voice, sms/mms and data into fixed ratio subscriptions where you cannot choose a separate amount of voice minutes and data. So it's either few voice minutes and few MBs of data per month or mucho voice minutes and mucho MBs per month:
- 100 min/sms & 100 MB = 30 euro p/m
- 1000 min/sms & 1500 MB = 100 euro p/m

So if you want a lot of data you get lots of voice minutes & sms messages if you use them or not. You cannot just get cheap data MBs alone. So if you get these voice minutes and sms messages anyway it obviously negates the need to use Skype.

Like I said mobile internet has boomed big in the Netherlands in the last two years and carriers offered cheap unlimited smartphone data subscriptions. T-Mobile even had network capacity issues due to their iPhone succes and monopoly at first.

But now the carriers have openly stated apps like whatsapp and Skype are eating into their revenue and that the age of unlimited internet subscriptions is over since it's just costing them too much. Playtime is over.

So in short the carriers just make the value proposition of using Skype less attractive negating the need to use it. It might still be attractive for e.g. calling abroad but not for calling nationally.

I still have read no arguments on how the carriers would make money from Skype, i.e. on why they would love it.

Mikko Martikainen


I agree. It will take years, but the carrier business model has been disrupted and it is apparent the carriers won't disrupt themselves. In time, as has been the case nearly always with disruption, the carriers will lose revenue, profits and influence. In the meantime, they will do their utmost to try to slow down the disruption and preserve their current business model.

In this regard, Microsofts purchase of Skype was a great disruptive move. Coming from a company that has spent the last couple of decades defending it's business model from the open source disruption, I think it's pretty remarkable that they are now embarking on a disruption of another industry altogether.


You don't seem to acknowledge how fundamentally the mobile industry is changing. Sure, the change is slow and easily hidden behind the incredible growth and transition from dumb/featurephones to smartphones, but the days of glory for the carriers are already numbered. Unless you acknowledge all the disruptive forces at play, your analysis will miss critical elements. You have a great understanding of the "traditional" carrier business, yet you don't really report anything about how that side of business is changing. This post, and your previous mentions about Skype and how much carriers hate it, is pretty much the only thing you've said related to that. Do you honestly believe that carriers will be able to stop Skype and other VOIP apps altogether (and mobile TV, and streaming music, and instant messengers, and the ever growing number of other things that threaten the existing carrier business model)? Or do you agree with me that the future business of carriers is simply to provide the infrastructure to move data?



I am not trying to refute anything Tomi said. As I wrote, Skype is the best example of the problem faced by the carriers. The reality is that the carriers have increased the capacity and performance of their networks by many orders of magnitude. When you sell data by the KB, voice and SMS rates seem reasonable. They now sell by the GB, which changes everything.

As Tomi keeps saying, this is an enormous industry where huge amounts of money are in play. This is drawing a lot players into the game, many who see pricing distortions created by the carriers and hope to capitalize on them. I do not think the carriers can control pricing as they have in the past.

By the way, my $0.05/MB figure was based on rates in Canada, one of the worst markets for consumers in the developed world. Our market is controlled by a powerful three company oligopoly who, still force feed us 3 year contracts and charge $25/MB when roaming. Obviously they are very, very reluctant to compromise the higher margin side of their business. However, even in this environment data rates have come down and will likely continue to.


@Baron95 & Darwinphish

In the Netherlands we also have a 3 party oligopoly. At the start of this year we *had* reasonable priced unlimited data plans. But now the carriers are losing too much revenue and have reversed that in lockstep.

Are they playing nice? Hell no, it's not in their interest. We used to have 5 carriers but 2 got acquired. The carriers argued the market was too small for 5 carriers. Of course this is BS but remember this is about big money. The carriers just buy their competitors, the politicians or engage in all kind off stalling strategies.

Just look at Microsoft with their endless bag of anti competitive tricks, technologically, commercially, politically, etc.

Just for fun I checked how many Windows Phone handsets are offered at the 3 Dutch carriers' websites:
KPN: 1 WP phone (
T-Mobile: 1 WP phone (
Vodaphone: 0 WP phone (

And those 2 lonely Win Phones at KPN and T-Mobile's site are show below the middle of very long pages buried between dozens of other phones. All Nokia phones are also shown below the middle of these page at *all* 3 carriers.

So at least in the Netherlands WinPhone and Nokia are clearly getting the cold shoulder from the carriers. It for all to see just check their sites. And make no mistake the vast majority of phones are bought through the carriers over here. People get a new phone when they renew their subscription (typically 2 yr) and can get a new subsidized handset.

Btw. Wifi is not mobile, there's no handover between cells. It might be a stopgap alternative e.g. when on vacation, but it just does not offer the same convenience: moving while calling.


The operators hate Skype so much that at least 3 of them, to my certain knowledge, looked into buying it before Microsoft.

Most operators are being sensible and pragmatic. They know that voice revenues are under threat from:

- Regulators squeezing interconnect & roaming fees (far more important short-term than VoIP)
- Shift away from telephony services to other modes of communication (teenagers hate talking on the phone & use Facebook or BBM instead)
- Accounting standards changes changing how "voice" is calcuated. At the moment it's over-inflated with subsidy repayments & "line rental" which is increasingly used mostly for data anyway
- Some impact from Skype & peers
- A complete lack of innovation in voice services. Apart from being able to do it while walking around, it's the same as 100 years ago

I speak regularly to operator strategy and voice/messaging heads who know that the writing is on the wall. They are trying to defend against faster erosion, but also being pragmatic about future possibilities.

They are also aware that there is a major transition coming up fast with LTE, which *needs* mobile VoIP. The official solution, VoLTE, *might* work, but it's unproven. White-labelling Skype or a similar service is a Plan B if it fails. And they'd much rather deal with Microsoft than Skype on its own.

Finally, operators are (or should be) happier that it was Microsoft that bought Skype, and not Google, Apple or Facebook. Although I still think that Vodafone or AT&T should have acquired it instead.



I think your 'sooner or later' thought assumes a free and level playing field. In practice these do not exist 'naturally', these situations quickly evolve into mono- or oligopolies I think most people can directly observe in their local carrier market. Hoping for the free market entrepreneur to ride to the rescue will be a very long wait in my opinion. You can probably better wait and marry a rich prince or princess so you don't have to worry about such lowly issues as carrier rates ;-)

Just compare the state of wireless in the US with e.g. Japan. The supposed US 'free market' situation has lead to an oligopoly that offers buggy primitive fragmented networks that are lagging those in Japan by half a decade where the government is far more deeply involved. A laisez-faire free market is not the answer since disruptors will just be acquired and neutralized so the oligopoly will retain its pricing power. The acquisition of T-Mobile by AT&T in the US neatly illustrates this.

My point is this is not a technology issue where you say 1 minute of HD video = 10.000 minutes of voice. Bottled water is also 1000x more expensive than tap water, this comparison is moot. You have to look at it from a commercial perspective. Any new entrant carrier will also charge the maximum they can for the voice/sms/data and differentiate between them. It doesn't make business sense not to do so.

Here in Europe the European Council (euro gov.) has lowered the amount carriers can charge for making and receiving calls & texts when you're roaming in a different EU country. This *has* had a direct negative impact on the carriers and a very positive impact on anyone using their mobile abroad within Europe. Skype has it's place for e.g. making video calls to friends and family when your at your hotel but it's a niche. When I'm traveling I want to be able to call and be called *all the time* not just when I'm in range of free or cheap wifi.

The 'techno utopia' argument being articulated here (free or cheap data combined with circumvention tools like Skype) is very narrowly focusing on technology. It doesn't take into account the business & political ecosystem the carriers live in and the convenience of regular voice call & texts for the end user.


Nokia is becoming like MS under Elop indeed. Look at this article:

“Mosaid deal raises worry of anti-trust probes”


@Steve; Weird that there are only 2 WP phones on carriers in the Netherlands right. Or is it because they are hard to sell because of the lack of Dutch language support right now or the lack of normal Marketplace access?

It's a testament to KPN that they even carry a WP phone right now with so little support from MS in the Netherlands. WP isn't even officially launched in the Netherlands right now.

WP isn't getting the cold shoulder right now. It's rather getting a pretty fair deal. Being sold, by a carrier, in a country the platform doesn't even support.

The comments to this entry are closed.

Available for Consulting and Speakerships

  • Available for Consulting & Speaking
    Tomi Ahonen is a bestselling author whose twelve books on mobile have already been referenced in over 100 books by his peers. Rated the most influential expert in mobile by Forbes in December 2011, Tomi speaks regularly at conferences doing about 20 public speakerships annually. With over 250 public speaking engagements, Tomi been seen by a cumulative audience of over 100,000 people on all six inhabited continents. The former Nokia executive has run a consulting practise on digital convergence, interactive media, engagement marketing, high tech and next generation mobile. Tomi is currently based out of Helsinki but supports Fortune 500 sized companies across the globe. His reference client list includes Axiata, Bank of America, BBC, BNP Paribas, China Mobile, Emap, Ericsson, Google, Hewlett-Packard, HSBC, IBM, Intel, LG, MTS, Nokia, NTT DoCoMo, Ogilvy, Orange, RIM, Sanomamedia, Telenor, TeliaSonera, Three, Tigo, Vodafone, etc. To see his full bio and his books, visit Tomi Ahonen lectures at Oxford University's short courses on next generation mobile and digital convergence. Follow him on Twitter as @tomiahonen. Tomi also has a Facebook and Linked In page under his own name. He is available for consulting, speaking engagements and as expert witness, please write to tomi (at) tomiahonen (dot) com

Tomi's eBooks on Mobile Pearls

  • Pearls Vol 1: Mobile Advertising
    Tomi's first eBook is 171 pages with 50 case studies of real cases of mobile advertising and marketing in 19 countries on four continents. See this link for the only place where you can order the eBook for download

Tomi Ahonen Almanac 2009

  • Tomi Ahonen Almanac 2009
    A comprehensive statistical review of the total mobile industry, in 171 pages, has 70 tables and charts, and fits on your smartphone to carry in your pocket every day.

Alan's Third Book: No Straight Lines

Tomi's Fave Twitterati