Thursday, June 3, 2010

Skype on the move: Does it finally add up?

It's the revolution that has failed to happen. A couple of years ago it seemed that internet telephony - Skype and the like - were going to prove hugely disruptive to the mobile industry, ushering in an era of free calls and forcing mobile operators to change their business models.

Skype application on iphoneAt Barcelona's Mobile World Congress, manufacturers like Nokia talked excitedly about putting Skype on the latest handsets. Operators, perhaps fearing that their income stream from calls would dry up, seemed less excited.

As well as Skype, a number of services such as Fring, Jajah,and Truphone started offering apps on smartphones which, in theory, made it possible to make free calls with ease from around the world. Having tried a number of these apps myself, it's my impression that they have failed to deliver the ease of use that would make them a mass-market proposition and hence a real threat to operator revenues.

At home it has made little sense to make Voip calls, unless you are a pay-as-you-go customer - anyone who has a monthly contract will already have paid for lots of ordinary phone calls, so why use a more complex alternative? Abroad, it seems more sensible - until you realise that you can only make calls over a wireless network, which in many places are only available to paying customers.

But now Skype has come out with an update to its iPhone app which, at first sight, could prove a real breakthrough. The key aspect is that it now allows calls over a 3G network as well as wi-fi. Not only can iPhone owners make calls via 3G to other Skype users - but they can also call mobiles and landlines around the world, with the promise of very low rates.

What's more, the audio quality of the calls is massively improved with what Skype describes as CD-quality sound. As someone who is always on the look-out for new ways of doing live radio broadcasts, this immediately piqued my interest - and a Skype call to the BBC control room confirmed that the audio was up to broadcast standard.

So if it's so good, why have mobile operators like O2, Orange and Vodafone allowed this app onto their networks in the UK, with its potential to show their customers a cheaper way of calling? Russ Shaw, general manager for Skype Mobile in Europe, said they had had no complaints so far, and his theory is that the mobile industry is learning to live with his company:

"We've found with the operators that we've worked with that it helps drive smartphone take-up, and that the Skype customers tend to spend more on other services."

Russ told me I was wrong about the company's failure to date to make a real impact on the telecoms industry - he pointed out that that 12% of international calls now go via Skype, and although the vast majority of that traffic is on the desktop, mobile use is now really accelerating.

But there's one catch which could make consumers wary about mobile Voip calls - and operators all too happy to see them take off. I noticed after making a 3G call to another Skype user that two minutes online consumed over 1Mb of data. That's fine on my unlimited data plan in the UK - but would cost me £6 in the United States. Not such a great deal.

So you can see why mobile operators may resist pressure to cut international data charges. For now, internet mobile phone calls only pose a limited threat to their revenues because the sums don't quite add up for consumers - if the cost of data roaming plunges, they will become no-brainers.


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