Mobile Skype calls for free - strange but true

With Deutsche Telekom announcing its T-Mobile operations in the US and UK were struggling to perform in these harsh economic times, it might appear odd timing for a rival European operator--3UK--to announce it plans to offer customers free usage of the Skype VoIP service.

Never one to let convention stand in its way, 3UK says there will be no data charges or top-up fees for either contract or pay-as-you-go customers who use Skype on its network. Anyone with a 3 handset and a SIM enabled for Skype can talk and IM as often as they like to other Skype users--for FREE.

While this announcement might attract attention, is it all it appears?

Skype claims its service is used by some 400 million people, with 3UK being one of the very few mobile operators that has actively supported its usage across its under-utilised 3G network. However, 3UK has never revealed data regarding Skype usage over its network, but IDC has speculated the company still derives the majority of its revenues from more conventional mobile services--namely voice calls, with only a very small percentage of 3 customers making Skype calls.

According to John Delaney, a research director with IDC, this initiative by 3 is less about free calls and more about positioning the company as more of a mobile Internet provider as against struggling in an increasingly competitive market against its rivals--as is being experienced by T-Mobile UK.

Delaney believes this offer, which is sure to be promoted strongly, will not significantly cannibalise 3's conventional call revenues, at least until the number of Skype phones reaches a much higher percentage of total phones in use. However, what the company will lose is the data revenues that were formerly gained from Skype usage--how big this loss might be to justify making the Skype service free is not something 3 has made public, but it's likely to be fairly low.

On the upside, 3 will gain some significant benefits from this move, namely the generation of PR, stimulating the usage of other (chargeable) mobile Internet services and attracting new subscribers with the idea of "free calls." If it manages to achieve only a couple of these, then, for a small loss in data revenues, the initiative could be considered a success.

Interestingly, the only other UK operator that hasn't adopted an openly hostile stance towards mobile VoIP, T-Mobile, is predicting that cellular European operators will eventually buckle and begin integrating VoIP services like Skype into the phones they sell. Currently, the head of Internet and entertainment at T-Mobile UK maintains that mobile VoIP is only used by a few keen advocates, but accepts it will be integrated into handsets sometime in the future.

With Nokia having said it will include Skype in many of its forthcoming handsets, a statement that it "reworded" following outcries of rage from Orange and O2, the shift is underway. Other operators might not offer mobile VoIP for free, but someday it'll be commonplace. -Paul