The apps and the smartphones are in place, but a lot of complexity has to be sorted out before mobile video calls can really take off.

There was a time in the not-too-distant past when Skype video calls could only be placed on a computer. Now, the company’s technology runs on iOS and Android smartphones. It’s being pre-loaded onto Verizon Wireless’ lineup of LTE devices. Skype-to-Skype video calls can be made over Wi-Fi and 3G. The company has created a program for operators with low 3G broadband penetration and has added KDDI in Japan and multinational operator Hutchinson 3 to its list of carrier partners.

Skype’s aggressive push to move its PC platform onto smartphones is no accident; the company sees mobile video calling as its next big growth opportunity, and for good reason. Mobile video chat is positioned to make a huge splash with consumers – and we’re not just talking about FaceTime on the iPhone 4. A growing number of phones and tablets have the front- and back-facing cameras needed to conduct video calls. There’s an abundance of video chat apps on the market like Tango, ooVoo and Fring, and operators are rolling out faster networks with the capacity to handle datahogging video calls.

“There’s really two key things to making video calling work great: the experience on the handset and the network speed you have,” says Rick Osterloh, head of consumer product management at Skype. “4G and the handsets that are coming out right now – it will drive adoption.”

Osterloh says the company’s video calling app for the iPhone has been tremendously successful: It was downloaded 4 million times and used for 1 million calls in the first 24 hours after its release on Dec. 30, 2010.

“People have thought of Skype for years as a way to do video calling. This is just a very logical extension of what we’re doing,” Osterloh says, citing the fact that video was used in 40 percent of Skype calls in the first half of last year.

Skype plans to expand its video calling options with technology acquired through its purchase of Qik, whose platform lets users share videos in real time or archive them for later viewing. The company recently rolled out group video chat for its computer users, and Osterloh doesn’t rule out the possibility of

Skype’s group video chat app hitting smartphone platforms. Skype’s aggressive push into mobile video calling is part of a wider move within the market to make the service available to more subscribers in more markets as faster wireless networks become more readily available and specially equipped smartphones hit shelves.

Chang Feng, vice president of technology and innovation and video chat developer ooVoo, says the company’s ultimate goal is to extend video calling to “anybody from anywhere on any device.” The Skype rival has already launched its video chat technology on Android, Macs and PCs and will release an iOS app this spring. OoVoo also offers multi-party video chat on both its mobile and computer platforms that lets up to six people converse at one time.

Feng is optimistic about the uptake of ooVoo on smartphones, but says a little interoperability would go a long way toward moving the market past early adopters. “I think it has to cover multiple platforms, multiple operating systems, multiple carriers – make it more like a phone service,” Feng says, referring to the seamlessness of placing a voice call over a cellular network. “I think you need that for this to be a viable service.”

THE INTEROPERABILITY DILEMMA
Compared to how easy it is to place a voice call or send a text message, mobile video chat is a bit of a hassle. In order to place a video call with Apple’s FaceTime app, for example, iPhone 4 users have to make sure they have access to Wi-Fi and even then they can only place a video call to another iPhone 4 user with FaceTime and a Wi-Fi connection. It’s a far cry from the simplicity of a voice call and limits the usefulness of the app.

Other technologies on the market are similarly complex. People using apps like Skype, ooVoo and Fring have to make sure that the intended recipient of the call has a matching app – a consideration users don’t have to take into account when placing a voice call or sending a text message.

“It used to be if I were a customer of any carrier, I knew I could communicate with any other subscriber within that carrier. Now I’m in a situation where if I have an iPhone with FaceTime and I want to communicate [by video chat] with someone on a Droid with Skype, I can’t talk to them,” says Jeff Gordon, COO at Syniverse. “How do you solve that?”

Syniverse develops the back-end systems that make voice, SMS and data interoperate between disparate networks and devices and is now targeting mobile video. The company has developed an interoperable mobile video broadcast platform that lets users broadcast a live video stream that can be watched by any other wireless subscriber with a data-capable device without requiring any new technology, software or application on the receiving mobile handset or computer. The technology is something of an interim step to creating interoperable systems for mobile video calls.

Gordon argues that mobile video calls must reach a high level of interoperability for the technology to reach wide-scale consumer adoption. “If you look at SMS utilization rates, it didn’t become a killer app until interoperability became a reality. Mobile instant messaging never became a killer app because interoperability never happened,” he says. “It has to work ubiquitously.”

Gordon says Syniverse is technologically “well down the path” for interoperable mobile video calls and is working to convince operators and app developers to get involved in the effort. He says the biggest obstacle at this point is getting video chat developers like Skype to adhere to common standards or open their APIs to allow at least a basic amount of interoperability.

A fully interoperable video call might look something like Aylus Networks’ new video calling technology, which made its commercial debut in February at Mobile World Congress. Aylus Video Calling gives subscribers making a voice call the option of moving to a two-way video session. Users simply start a voice call and press a button if they want to add video.

Unlike third-party apps like Skype, Alyus Video Calling is embedded in the native voice telephony technology on the phone and doesn’t require users to launch a separate application or make sure the receiving party has the same app installed and running. It works across all networks and all devices as long as the phones have the necessary cameras.

Aylus says its video calling platform is ready for trials, and it is working to set up test runs of the technology with some of its Tier 1 carrier customers. The company is positioning the technology as a freemium service that operators can use to supplement slumping voice revenues, a potential reason to push subscribers to use mobile video chat.

Aylus CEO Mark Edwards says that people will adopt video calling – if it’s presented in an easy, intuitive manner that’s more closely aligned to the voice calling experience than the third-party app experience. “Adding video seamlessly into that same [voice] experience is a very viral way to enrich the conversations that are already taking place,” Edwards says.

WHERE’S DEMAND?
App developers, not operators, are the companies leading most of the charge on mobile video chat. Operators have little incentive to encourage customers to use a free, bandwidth-intensive application that still leaves a lot to be desired when it comes to the user experience, especially when demand for that service is still relatively low.

Though the substantial portion of Skype’s calls using video seems to indicate a certain amount of demand for a smartphone-based version of the service, that demand has yet to gain significant momentum with consumers.

“The majority of calls are dealt with just fine over a voice connection. When you think about video calling, consumers need to orient themselves as to when they need a video call,” says Phil

Asmundson, a managing partner at Deloitte’s Technology, Media and Telecommunications practice. Asmundson says he believes that mobile video calls have a “real strong place” with consumers, but the technology is well ahead of demand. “Consumers change slower than technology does. We come up with these great technologies, but the consumer is going to adjust to them on their own timeframe,” he says.

Consumers accustomed to the visual anonymity of voice calls aren’t entirely comfortable with video calls yet, analysts say. Hard numbers on mobile video calls aren’t available due to the nascent nature of the market, but analysts report that mobile video calls are mainly used to connect with distant family members during holidays and other special occasions, though younger users who are accustomed to using Skype video chat on their computers may be more quick to use the service on their phones.

“To me, this is totally going to be generationally driven. I think much of the younger generation will want to use this tool, whereas a lot of the older generation won’t,” says Zeus Kerravala, a distinguished research fellow at Yankee Group. “When it comes to things like video chat, the younger generation kind of lives by a ‘If you build it, we will use it’ kind of mentality.”

It could be some time before the average user becomes as comfortable with a video call as they are with a voice call, especially given the hurdles they have to clear to place a mobile video call in the first place.

Most operators, with the notable exception of Verizon Wireless, seem to be steering clear of actively encouraging their subscribers to use mobile video calling over a cellular connection. Mobile video is quickly emerging as the main driver behind skyrocketing data traffic, and it makes sense that operators may be hesitant to exasperate the situation by pushing their customers to use video calls – especially without a compelling amount of demand from subscribers or a clear path toward monetization for the services.

Someday, mobile video calls could become as familiar as Dick Tracy’s two-way wrist TV, but if market trends hold steady, that day is a long way off.