3GSM: Skype Gets Into 3G

Mobile operator Hutchison 3G will offer Skype connectivity to its subscribers in up to eight markets around the world

February 14, 2006

3 Min Read
3GSM: Skype Gets Into 3G

BARCELONA -- 3GSM World Congress -- Skype Ltd. struck a deal with Hutchison Whampoa Ltd. (Hong Kong: 0013; Pink Sheets: HUWHY)'s 3G operations to have its VOIP services trialed and then made available to the operator's mobile customers in up to eight markets around the world -- Australia, Ireland, the U.K., Denmark, Sweden, Austria, Italy, and Hong Kong -- later this year. (See Skype Teams For 3G.)

"This time last year none of the mobile operators wanted to talk to us, except Hutchison 3G," says Skype CEO Niklas Zennstrom at a press conference staged near to the 3GSM event here in Barcelona. "Things have changed. We are doing these trials with Hutchison 3G, and we are talking to other mobile operators, too, including some big ones."

"Our users have sent a strong message that they want to use Skype on mobile phones. This agreement means we are opening up for business in the mobile. People say to me that mobile operators must hate Skype, but more of them are coming to us to talk about ways we can work together. The mobile market is moving towards a model where subscribers pay for access to the network," not for voice calls by the minute, the CEO explains.

Neither party would discuss financial arrangements, such as revenue shares, but the incentive is clear: Hutchison currently has 11 million subscribers on its 10 networks; offering Skype will, hope both parties, drive subscriber uptake. As Hutchison does not charge for its voice calls at present -- it sells its services as flat-fee bundles -- adding Skype to revenue-driving bundles will not cannibalize by-the-minute voice call charges.

For Skype, the Hutchison deal gives it another chance to add new names to its growing user base -- currently at 75 million -- and provide another way for people to use its free and its paid-for services.

The other mobile operators Skype is in talks with are "those that are moving towards flat-fee package" business plans, reports Zennstrom.

The move will give incumbent fixed operators another reason to feel uneasy about the creeping influence of the Skype brand and the potential volume of voice calls it could command. (See BT Takes Swype at Skype.)

Friendly trials will begin in Sweden, where Skype is already bundled with a flat-fee data card access service, with other markets to follow, says Christian Salbaing, European managing director at Hutchison Europe Telecommunications, part of the Hong Kong-based Hutchison Whampoa Group.

According to Salbaing, each market will ultimately decide whether or not to offer the service, but cannibalization isn't an issue as the Three UK operators in each country will not have to change their business models. He refused to directly answer questions about whether 3 customers would be able to use Skype's paid-for services, such as SkypeOut and SkypeIn, saying only that all of the VOIP specialist's services would be examined for future development.

Skype, which is now part of eBay Inc. (Nasdaq: EBAY), announced a channel relationship with European telecom accessories retailer Dangaard Telecom, which has more than 34,000 outlets. The VOIP firm also announced an update to its Pocket PC version. (See EBay Buys Skype for $2.6B.)

— Ray Le Maistre, International News Editor, Light Reading

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