Fring aims to cut cell phone costs with VOIP

Avi Shechter, co-founder and CEO of Fringland (Fring), could be on to something big with the launch of a cheap Internet-based phone service that runs over mobile networks. But the Israeli entrepreneur could also be in for the fight of his life with mobile phone network operators determined to protect their cash-cow voice business from virtual service providers.

"I believe Fring brings value for users," Shechter said in an interview on the sidelines of the 3GSM World Congress in Barcelona, adding that the low-cost service will have an impact on the voice business of mobile phone network operators.

Fring didn't have a booth at the show but if you ran into Shechter, he was more than happy to demonstrate the service.

The former co-general manager of instant messaging company ICQ Inc. and his team of 30 have launched a peer-to-peer VOIP (voice over Internet Protocol) service that carries calls over cell-phone networks in much the same way PC-based Internet telephony services transport conversations over Wi-Fi or fixed-line broadband connections.

You can download the 200K-byte Fring application to your handset for free. You'll need a Nokia Corp. Series 60 3rd Edition phone but Fring hopes to widen the choice of handsets by enabling the application to run on other operating systems as well, including Microsoft Corp.'s Window Mobile.

Fring not only looks and feels a lot like other PC-based applications such as Skype, Google Talk and MSN Messenger that offer integrated VOIP, instant messaging and real-time presence services; the application also connects with them. It uses Skype's API (application programming interface) but is not endorsed or certified by Skype, according to Fring's Web site.

You can fill your contacts list with other Fring users, or friends on the other services, see when they're online and communicate directly with them.

When in idle mode, the Fring application drains the battery a little faster than a cell phone normally would in standby mode -- but with the advantage that you are able to see when your friends are available, and signal your availability.

The cost of using Fring depends on your data plan -- the application sends around 4.5M bytes per hour spent talking. While the costs of local or in-country calls are comparable with standard calls, the real savings appear to be made on international calls.

You can make calls to users on public telephone networks, using Skype Out, but these carry an additional fee on top of the data charges. Also, if you make a "roaming" call from outside your home network, you will be charged a data roaming fee as you would for any other data service.

For all its features, Fring still has some kinks. If you try to make calls over GSM (Global System for Mobile Communications) or GPRS (General Packet Radio Service) networks, you'll notice a crackly voice quality similar to early PC-based VOIP service, according to Shechter. "Our service is designed for 3G networks but we're working on improving the quality in the other networks," he said.

Because you have to connect to the Internet to use the service, you'll need a data package of sufficient size, and although most mobile Internet data packages are volume-based, make sure there's no time limit. That would severely restrict your ability to use Fring or any other mobile VOIP application for that matter.

Some operators, such as T-Mobile International AG & Co. KG, have banned the use of VOIP applications on their networks.

Other operators may also introduce measures to block access to virtual mobile VOIP service providers like Fring that use their mobile data networks without commercial agreements. To offset any lost voice revenue from the switch to IP, such operators could charge a specific VOIP subscription fee, or offer a more expensive data package service fee for using VOIP or even bundle additional services for a higher fee.

Particularly in Europe, operators have invested far too much money in licenses, equipment and customer acquisition to give anything away. Like fixed-line operators that first fought and then adopted VOIP services, mobile operators must now deal with a disruptive technology that could radically change their business models.

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