De Hesselle's Truphone is but one of several world-oriented mobile phone operations that are taking advantage of emerging low-cost global digital cell systems, newly privatized in-country telephone laws and cheap smart mobile devices to offer dramatically frugal global communications products in the lucrative $45.1 billion world mobile roaming market, according to U.K.-based research firm Visiongain. And if my week of doing my work with Truphone -- and a similar product from a company called Telestial -- is any indication, the age of high priced global phone roaming from Verizon ( VZ), AT&T ( T), Sprint ( S) and T-Mobile is officially over. The global mobile virtual network operator
Truphone pulls off its low-cost global phone and data trick not by investing in forests of cell towers or fleets of phone repair trucks. Rather, it behaves like a so-called mobile virtual network operator. In the U.S., that's Boost Mobile or Virgin Mobile. Truphone gathers together long-term carrier agreements with in-country cell operators, say Europe's Vodafone ( VOD) or Telecom Italia Mobile ( TI). Then it offers international travelers not one, but two (!) cellphone numbers, in two different countries, baked into the same phone bought in their home country. My test BlackBerry ( RIMM) Bold, for example, had a U.S. number and a U.K. number. And this two-number mobile identity opens a world of cost-saving possibilities in world telephony.
Truphone figures out automatically which identity is cheaper for a given call and passes that savings on to me. Actual savings vary -- we are talking about global cell and data now, and estimated costs are just that: estimates -- but in general I felt that Truphone's claimed rates of roughly half traditional American operator provided global roaming costs were fair.
Services such as Truphone are serious investor stuff indeed. Why? Even though products such as Truphone are just finding a toehold in America, globally they are already commodities. Take a look at something called eKit, which is offered by a similar global virtual provider called Telestial. Telestial is not a hip, fancy, indie startup like Truphone, but rather a wholly owned subsidiary of the JT Group, from the island of Jersey, off the coast of Normandy, France. "We have been a legal place to locate global telephone equipment for about five years now," John Assiter, marketing manager at Telestial, told me last week. "Since then we have been able to ramp up a full range of phone and data products that compete globally." Telestial offers cheap global roaming by shipping a dirt-cheap unlocked Android smartphone with not one, but two SIM card slots. One slot held my U.S. phone identity. One got the Telestial SIM. And, poof, yet again my global voice and data rates got cheap, fast.
Domestic operators feel the heat
No question, U.S. mobile operators are already feeling global roaming fee pressure. Even though AT&T declined to comment for this story, it has begun quietly discounting global voice and data fees and announced an interesting deal with global Wi-Fi provider Boingo Wireless ( WIFI). And analysts say more discounting is coming. "Operators need to alter their strategies in order to maintain these revenue streams," said a report by the U.K.'s Visiongain. All of which is looking sadly familiar to leery Web investors: The once invulnerable global phone roaming market turns out to be just like any other information-based product in the declining digital age. Too many competitors. Not enough barriers to entry. And no reason why it won't get a lot smaller, a whole lot faster.