3 opens way to Skype

In a world first, 3 UK is opening up its network to allow anyone with a 3 SIM and a compatible handset to enjoy unlimited Skype-to-Skype calls and instant messages without ever having to pay.

From 1 May, there will be no data charges or top up fees for either contract or pay as you go customers who use Skype on 3’s UK network. Anyone with a 3 Skype-enabled handset will be able to buy a 3 SIM and talk as much as they want to other Skype users without ever having to pay another penny.

During the summer, 3 will expand its offer making it possible for anyone with a compatible unlocked 3G handset in the UK, to take advantage of free Skype calls, whether or not their phone is from 3. Anyone that wants to talk on a mobile for free will be able to use a Skype-enabled 3 SIM to make and receive totally free Skype-to-Skype calls and to use Skype’s IM.

Steven Hartley, senior analyst at Ovum, commented: “3 should be applauded for being disruptive. This move is undoubtedly another part of 3 UK CEO Kevin Russell’s strategy to disrupt the status quo in the UK. He should be applauded for at least trying to do something that stands out from the crowd, something he has certainly achieved with this move.”

Hartley said the UK mobile network operators’ antipathy to all forms of VoIP (even the less than technically pure form provided by 3) is well documented and is common around the world. The 3 move is a customer acquisition play intended to encourage users attracted by the Skype offer to take up 3, he continued; once on board the intention is to sell ‘traditional’ voice, SMS and data.

“Indeed, Russell states that 3’s Skype users are less likely to churn, use 14% more voice minutes, contribute 10% more SMS revenues and use three times more data than their peers not using Skype,” Hartley explained. “Therefore, this is a canny move to change 3’s prepaid Skype perception from one of forcing users to top up credit to one of encouraging them.”

Yet Hartley added: “Nonetheless, the fact remains that 3 is caught in something of no-win situation in the UK. If this gambit succeeds then 3 will have disrupted the market, but only insofar as forcing the other operators to respond. As its competitors are far larger and have far deeper pockets, the likelihood is that 3 will come off worse in the long term. And if it fails, 3 can only try even more desperate tactics to attract customers.

“In addition, 3 is unashamedly targeting low-value customers with this offer, potentially limiting the incremental revenue opportunities. Skype users tend to be young with limited budgets. They may be the future of the mobile industry, as discussed in the article below, but are not going to markedly harm the revenues of the major players’ revenues in the short term.”