Back when SMS was coming up in the world, grumpy old men everywhere wondered why in tarnation anyone would want to type what they could say in a simple voice call from the old rotary hanging on the wall. We all know how wrong Grandpa was about that one.

Now here comes mobile video calling, and the stodgy naysayers are wondering why in the heck anyone would want/need to look at the person they’re talking to. You can hear the old man saying: ‘It’s not like you’re that darn good looking anyway, Son.’ But then Grandpa gets a heart-melting look at his new minutes-old baby granddaughter who lives 2,000 miles away and he’s a believer in ‘picture calling.’

The question is whether it’s just Grandpa who’s driving adoption of the technology or end users en masse.

It Takes Reach, Interoperability to Tango

To be sure, a number of applications and services offer ways to chat using video from both desktops and mobiles. Tango, FaceTime, fring, ooVoo, Google, Qik, Skype, among others, all offer variations of the technology. But just like our old friend SMS, interoperability may be the key to driving growth and expanding reach.

Eric Setton, chief technology officer and a founder of Tango, which provides cross-platform mobile video calling for smartphone users, says video calling on the mobile is set to explode in very much the way SMS did, with end users viewing the technology as just another facet of the everyday call.

Tango set up shop in September 2009, long before people viewed mobile video calling as a viable business. “People thought we were crazy, there were no front-facing cameras on phones and there was no video calling app that had been approved at the App Store, and Android was really in its infancy,” Setton says.

But when the company came to market in October of 2010, most of those obstacles had been overcome. “The iPhone 4 had come out and FaceTime had educated the world on the virtues of video calling. The Evo on the Android side was a phone that was starting to get traction, and carriers were actually OK pushing these devices out that did not prove to be a hindrance to the service at all,” Setton says.

Setton refutes the idea that the market has become saturated with video calling providers. “In the course of the next few years, basically right between 10 and 20 percent of all the calls that are placed on smartphones are going to become video calls. Think about how many smartphone providers there are and compare it to how many video providers there are and I think it’s a tiny number,” he says.

Aside from the size of the market, Setton says there are few players (aside from Tango, of course), that provide support for a variety of devices across platforms. For instance, he notes that Skype is currently available on just 21 Android phones. By contrast, Tango is available on 450 devices.

Setton stresses how important it is for a service to cover as many possible devices as possible, adding that Tango puts out an update to its app about every two weeks for just that reason.

Broad reach is a necessary part of any technology business, but the question remains whether people will be willing to pay for this technology. Setton says he’s not sure they’ll pay for just a standard video call, but he does think they’ll pay for additional functionality. “At least right now, I don’t see a strong value proposition around just calling, but I do see a lot opportunities for charging the consumer on additional services,” he says, declining to comment about the kinds of add-on features Tango is preparing to roll out over the next couple of months.

The Golden Egg

If interoperability is the golden egg for video calling, then it’s Aylus Networks that believes it can deliver on that promise. The company provides an infrastructure that will allow operators to roll out seamless video calling, across platforms, networks and devices, as an integrated part of every call.

 Mark Edwards, CEO of Aylus Networks, says that carrier-based video calling is the next evolutionary step for the technology. “As video calling really starts to take off, the value comes from allowing users to call anybody, anywhere, whichever system or network or service that they happen to be using,” he says.

Edwards says the perfect storm has been brewing for some time now, as high-powered devices with the right characteristics (large screens, fast processors) combine with ubiquitous 3G and 4G networks to create a user experience that actually does what it says on the box.

Consumers, Edwards says, already have been conditioned to understand the technology through various desktop offerings, as well as the recent flood of video calling apps. But it’s Skype’s big number – 42 percent of all calls in 2010 were video-enabled  –  that Edwards offers as verifiable proof that there’s a market out there just waiting to be nurtured.

But what will happen to the stand-alone app providers if carriers start offering an interoperable solution as a deeply integrated functionality? Edwards says it’s good for everyone and will increase monetization, as well as adoption.

“I think it will be very valuable for the user, but I think it will also be very valuable for the app providers, because once you start to have a carrier-based chargeable video call, that probably is one of the most significant steps in allowing those over-the-top providers to monetize their services,” Edwards said.

While Edwards acknowledges that users are not going to want to use video in every call, citing poor signals or those early, just-out-bed types of calls, but he envisions the technology being assimilated as an optional facet of any call. Granted, he admits that he’s talking in the 10- to 15-year timeframe.

Well, Can You See Me Now?

While providers of mobile video calling, as well as carriers looking to sell data, are hoping mobile video calling is the next killer app, there’s still a lot of uncertainty surrounding the market.

Consumers can be a fickle bunch and often led by whatever happens to be popular in the moment (Pet Rock, anyone?). The same can be said for the adoption of technologies, according to one study. “The Adoption Behaviour for Mobile Video Call Services,” co-authored by Judy Chuan-Chuan Lin and Elaine Shang-Yi Liu, showed that a user’s perceived critical mass (in other words, ‘everyone’s doing it’) is the most influential factor in shaping a mobile user’s intention to adopt video call services. In fact, the study found that perceived critical mass trumped even perceived usefulness, perceived price and perceived enjoyment.

So what are the drivers to critical mass? While Apple’s FaceTime and the bandwidth provided by next-generation networks are consistently presented as drivers for the market, a study by research firm Northstream found that only 1 percent of 3G calls were video-enabled at the end of 2010.

A late 2010 In-Stat report predicts mobile video calling users will grow at a 115 percent compound annual growth rate (CAGR) through 2015 (total revenue reaching $1 billion), with the Asia-Pacific region consuming 53 percent of the mobile video calling minutes used by that time. Those aren’t small numbers, but they’re not really off the charts, as the report concludes that ‘mass adoption is unlikely.’

It’s difficult to predict how consumers will react to any technology, and it will be interesting to see what 2011 numbers show about who’s calling who and how. Certainly, enough players are getting in on the act to stir up interest, but whether or not the interest hits ‘critical mass’ remains to be seen.