Mobile VoIP cannibalization a "myth", says Skype

Mobile VoIP cannibalization of voice traffic is a myth that needs to be challenged, a Skype executive said Monday, touting an independent study of Hutchison-owned 3 UK demonstrating that VoIP will boost voice revenues, not kill them.
 
The study from CCS Insight Consulting found that continuous Skype users on 3 UK’s network not only generate 20% higher revenue margins than non-users, but also nearly 60% more voice revenue than non-Skype users.
 
Even 3 UK’s SMS business has seen a boost, despite Skype’s messaging and IM capabilities. Skype users spend almost a third more on SMS than non-users and habitual Skype users are twice as likely to hold a data add-on, CCS reported.
 
“Hutchison initially saw Skype as an acquisition tool and a differentiator, but the real value has come from higher overall usage of its services and churn reduction,” said Dan Neary, Skype’s Asia-Pacific vice president.
 
Churn figures from the report indicate that over two-thirds of continuous Skype users upgraded their contract at time of renewal. For new Skype users, the figure was more than three-quarters. Only half of non-Skype users renewed their contracts, the study said.
 
Neary said the results of the 3/Skype partnership have galvanized Skype’s plans to partner with operators as part of its mobile strategy, which also includes downloads and preload deals with device makers.
 
“Our biggest challenge in working with operators is this historical perception that VoIP cannibalizes their voice business and there’s no way to work together, but our experience is that it’s very complementary,” Neary said.
 

“We need to challenge that myth, and now we have independent figures we can take to the operators to show that Hutchison’s leap of faith was completely justified,” he said.
 
Skype will also push on with its preload strategy, announcing Monday that its client app will be embedded in Nokia’s first Maemo 5-based phone, the N900, representing Skype’s first deal with Nokia.
 
Neary declined to reveal the terms of the Nokia deal, but said that preload “is important to us because you can create one-touch interaction that’s also better integrated with other apps on the device, like address book and presence, which makes it a better user experience.”
 
Skype posted total revenues of $185.2 million in Q3 2009, up 29% year-on-year. The company added 40.3 million users in the same period, bringing its user base to more than 521 million users, up 41% from a year ago.
 
Neary added that Skype had 20 million concurrent users in Q3, versus 18 million the previous quarter.

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