Hutchison 3 Group, the Hong Kong-based conglomerate with 3G licenses in eight countries, has announced an agreement with Skype Technologies whereby it will offer Skype’s VoIP telephony on its network.
Technically, this is not the first example of a mobile operator embracing Skype. Germany’s E-Plus did so last year after its larger competitor Vodafone had announced the intention of blocking all VoIP calls on its 3G network from July 2007. Vodafone has since recanted, but has yet to define how it will handle such traffic.
The Hutchison announcement, on the other hand, is a more far-reaching one, in that the group, though smaller in subscriber numbers in individual countries, is present in a number of markets (namely Austria, Australia, Denmark, Hong Kong, Ireland, Italy, Sweden and the UK). The deal also will enable Skype calling over Hutchison’s roaming partners’ networks in other countries.
The deal, which was cut by Hutchison’s parent company Hutchison Whampoa, is still at an early stage, so details are sketchy. The business model will presumably be to offer subscribers an all-you-can-eat data tariff from the operator, within which both SkypeOut and SkypeIn calling will be possible. What is not clear is whether SkypeIn calling will require a separate number from the regular mobile number, nor whether Hutchinson will be taking a share of Skype’s revenue (albeit small) from SkypeOut.
As for handsets, the official line is that the two companies will test Skype-enabled products from all of the major device manufacturers prior to launching an offering, although sources close to the deal say Nokia is a frontrunner, given the stage its development of Skype-enabled phones has already reached.
On the matter of operating systems, the two partners said they would be testing on Windows for Pocket PC (which these days is moving to Windows Mobile 5.0), Symbian and Linux.
What’s significant about this announcement is that both fixed and mobile operators are widely perceived to be under threat from services like Skype, in that the majority of them still rely on voice services for the bulk of their revenue. Embracing Skype is a strategy with an element of risk, therefore, in that they may be cannibalizing their voice revenue in the name of driving sales of data tariffs.
While that is certainly true, there is also the competitive aspect to bear in mind. That is, if they don’t do it, one of their competitors will, as was demonstrated in the German market. Now Hutchison has gone a step further by promising to offer Skype across its various markets (it has already begun testing the service in six countries).
Of course it has, until now, been only a minor player in most markets because, as a new entrant, it has no 2G subscriber base to migrate across to 3G, instead having to attract new customers, which in the more mature markets usually means poaching them from the incumbent players in 2G.
In the UK at least, it has been doing this by offering cheap voice services, precisely because spectrum utilization is more efficient in 3G, making it possible to squeeze more voice calls onto a frequency than in 2G networks. Still, the prospect of virtually free voice calling on its network with Skype, or rather very cheap SkypeOut calls to regular numbers and totally free ones to other Skype numbers, may start to sway more users to its services. Images of cracks showing in dams spring to mind.