Skype, which has recently partnered with 3 to offer its service free to consumers, has riled many operators.
So much so that, in February, a rift emerged between Nokia and operators O2 and Orange over the manufacturer’s plans to incorporate Skype onto its Nseries handsets.
Operators were concerned over lost revenue, as well as ownership of the customer. But operators will have to accept that there is ‘huge demand’ for the service, according to the company’s mobile senior product manager, Nicholas Babaian. He claims that around 500,000 Skype phones have been sold, and three million Skype apps have been downloaded onto iPhones since launch at the end of March 2009.
Skype’s dedicated mobile team also found, after research of its 440 million users, that customers wanted the service on their mobile as a priority.
The company has a three-pronged strategy to reach platforms such as Android and the iPhone, as well as manufacturers and operators. Babaian tells Mobile that Skype does not want to replace operators, and it is simply bowing to consumer demand for alternative methods of communication.
Many operators remain sceptical that free calls will mean they lose out. Babaian argues: ‘A lot of conversations with operators start over this concern. A couple of years ago, operators said they would not offer unlimited data plans. Now, with Android as a prime example, they are changing the business models.’
Babaian says the company’s aim is to ‘be available to everyone’, adding that another service, Skype to Go, is also available for those that do not have mobile internet on their phones as standard.
He admits that there are issues, but adds: ‘If there is demand for internet communications, then that will drive the market.’
He points to instant messaging as an example of operators submitting to consumer demand, and insists that operator discussions over Skype are happening ‘at the moment’. Further manufacturer partnerships are set to be announced later in 2009.
However, Babaian admits that Skype needs to be careful with manufacturer negotiations, even though partnerships are likely to happen more quickly than with networks, and says: ‘We need to be sensitive because they sell the device through operators.’
3’s Skype success
The success of 3’s Skype phone means manufacturers are keen to jump on the bandwagon. Babaian says: ‘It’s quite hard to differentiate solely on a device level, so Twitter or Skype help to make a distinction.’
3 is going in strong with its Skype offer. This week, it launched a marketing campaign to educate consumers on the service, one week after it offered Skype to all its customers as a prepay Sim card for any 3 handset. This summer it will open up the service by selling the Sim for £1.99 to any consumer to use on any unlocked 3G phone.
3 makes the majority of its revenues through data services and is aiming to
make money from other areas such as broadband.
In March, Skype released an iPhone app that allows users to make free calls over the internet. The service, which works over Wi-Fi, is free between Skype users, and calls to landlines and mobiles will cost less than normal network rates.
O2 is understood to have accepted the application because it works only on Wi-Fi and does not interfere with its 3G network. However, this was not the case in Germany, where T-Mobile has threatened users with disconnection for downloading and using Skype on the iPhone.
Babaian says: ‘It will be interesting to see the customer response to T-Mobile Germany. No one dictates what you access on your PC and it should be the same on your mobile – if customers want to try the service they will go to 3.’
With plans for domination in every mobile segment currently marred by clear resistance from all operators but 3, it will be a tough ride. Despite this, Babaian says: ‘At Skype, we want to do everything tomorrow. We know there is huge potential.’
Skype’s operator battle
Skype has strong opinions on operators’ resistance to the service, which it says should be available to everyone.
The company even argues that consumers who use Skype will potentially drive revenue, rather than simply take advantage of cheap calls, as they are also likely to use other data services.
At a 3 round table launch event in April, Skype president Josh Silverman said some networks have ‘an explicit policy not to allow our data packets through’, adding: ‘Will we see them doing the same with political websites in the future?’
Silverman also said: ‘I find their actions offensive. When a user buys data, they’re buying an opportunity to use that data – it should be up to them to choose which 0s and 1s they use.’