3's Bad Timing

9:45 AM -- Looks like Three UK and Skype Ltd. want to take their relationship to the next stage and produce a phone. The two companies are reportedly working together on a new handset with the Skype application integrated into the device. The handset is set to launch in the U.K. in time for Christmas and retail for less than £100 ($200). (See 3 Plots Mobile Broadband and 3 UK Prices X-Series.)

A 3 spokesman said: "The move... will mobilize Internet calls for a mass market." I see, so all of 3's "Vicky Pollards" can talk for free!

But am I the only one who thinks it's really not a good time to boast about a deal with Skype? eBay Inc. (Nasdaq: EBAY) just admitted that it paid too much for the free VOIP pioneer in 2005, Skype's talismanic CEO Nikki Z is no longer at the helm, and the Skype service recently suffered a significant outage. (See EBay: Too Much Hype in Skype, Skype Has New CEO, and Software Bug Stings Skype.)

Not a great triple whammy.

I suspect most U.K. consumers with any serious disposable income will pass by this mobile Internet calling device this Christmas and head for the nearest outlet selling the Apple Inc. (Nasdaq: AAPL) iPhone that's due to hit the British streets next month. (See Jobs Leads iPhone Into UK.)

— Michelle Donegan, Funky Devices Editor, Unstrung

IPobserver 12/5/2012 | 3:01:25 PM
re: 3's Bad Timing Agreed that the novelty value of Skype is on the wane.

I've used this quite a bit on 3 and it works well enough. It's good for cheap international calls, since they're normally out of bundle.

The service uses the standard circuit bearer for calls over the 3G part. This means you get a reliable connection (e.g. works on the train) and there's no VOIP efficiency hit on the radio network.

Obviously, anyone can do the same with the regular iSkoot client. Or you could just use one of those call forwarding appsGǪ But I like the way 3 has made it easy and cheap.

I'd guess the service costs 3 practically nothing to deliver.
AllKindsOfThings 12/5/2012 | 3:01:25 PM
re: 3's Bad Timing I wonder in general how low the price point must be in order to go through the hassle of needing TWO different ways to make voice calls to my peers.

I have a well working experience to reaching anyone and his brother already via the voice service of traditional carriers - and should be enthusiastic for a service that allows me to call only some folks, that might even only be randomly available at the device that has their Skype Client running? What Joe Blow user mass market appeal is that going to have?

Some open questions also reamin out of Three's operator perspective: If Three can today connect several customers over a well engineered, standardized, highly efficient 3G radio interface voice encoding service why would they swap that with a codec that allows the same cell to serve seriously fewer customers while incurring the same cost of running and operating the cell?

The logic of 3 eroding their own voice service revenue by pushing a foreign service does not make too much commercial sense to me - and the novelty value of the Skype Brand is fading every day.

Considering Skype's monthly ARPU is well below five US cents (!) on each registered User, eBay might start thinking of when Skype should start to earn money.... My guess would be in 2008, follwing a similar pattern as eBay itself or PayPal.
AllKindsOfThings 12/5/2012 | 3:01:20 PM
re: 3's Bad Timing So basically what Hutch does is what everyone else does: Undermine roaming tariff for the rare international calls (the Skype minute should cost 3 the same international termination as any other termination and when they can only reach a Skype equipped PC on the other end they eat the Minute price, as they cannot charge the recipient any fee.

But if you offer a cheap interanational price plan somehow without requiring the Skype Client being installed, where is the gain - ah - of course: You can't reach the Skype specific audience that you even don't know becasue you only know their Pseudonym by calling them on a normal price plan.

Is my impression still right that all international traffic of that sort could never make any money for 3, sondiering that te most will end in the "off-net" world, outside of the realm of telco managed recipients?

If it can't create much of the urgently needed ARPU for 3, could this be considered as mostly a customer retainment model?

This is (still) not really a mass market penomenon, except possibly for journalist, agile international startups, and other highly mobile international professionals.

All the Best!
IPobserver 12/5/2012 | 3:01:19 PM
re: 3's Bad Timing Yeah, I think it's just a little perk for customer retention and a hope that some of that Internet gloss rubs off.

You get Skype as part of the X-Series bundle.

I can't see anyone using it for work calls, since its connects to Skype. Journalists especially need to have a clear line, so wouldn't use it.

But there are a lot of immigrants in the UK who regulary call abroad from mobile. This could be seen as an alternative to calling cards.

I didn't claim it was a mass-market thing that would save 3. Just that it works quite well and is free(ish).
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