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3GSM: Skype goes mobile

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BARCELONA --- VoIP provider Skype’s growing wireless efforts culminated today with the launch of its first major carrier deal over a cellular network. Hutchison Whampoa’s 3 Group has agreed to offer the Skype service on its UMTS networks across the world.

Skype said today at the 3GSM World Congress that Hutchison 3 operators in Austria, Australia, Hong Kong, Sweden, the U.K. and Italy are all running customer trials of the VoIP service over both UMTS data cards and smartphones. 3 Sweden has already launched a commercial service over data cards, and all of the operators plan to roll out full commercial offerings by the end of the year. Their combined territory covers 75 million registered Skype users. In support of the new carrier deal, Skype released version 2.0 of its Windows Mobile Pocket PC software, which supports both Wi-Fi and 3G access.

Skype has been developing its mobile strategy for years since its users began accessing its peer-to-peer VoIP calling network from Wi-Fi enabled laptops. In 2004, Skype released its first software client for the Pocket PC platform, and since then Skype has been steadily announcing hardware and software partnerships to push its unique IP business model further into unfettered communications. Unlike other VoIP providers’ services, Skype’s basic offering is free. Skype users can call other Skype users free of charge—other services like voice mail and calling to the PSTN (SkypeOut) are where the developer makes its money.

In September, however, Skype announced its intentions to branch out from local area network to cellular. It signed a deal with German provider E-Plus, which agreed to bundle the Skype service with its 3G data card service. Skype officials, however, said the Hutchison deal is the first in which the Skype service is integrated directly into a 3G phone, allowing customers to switch between a circuit-switched UMTS connection to a SIP-powered VoIP call.

“This takes Skype beyond the PC into the mobile world,” said Niklas Zennström, Skype CEO and co-founder. “I believe this will accelerate the adoption and use of Skype to new levels.”

The Hutchison deal could have a profound and controversial impact on the cellular industry as it struggles to find new revenue models while still depending on circuit-switched voice for the bulk of its income. Any Skype mobile service is likely to mirror the Skype PC service, offering free phone calls between Skype users around the world, meaning carriers would lose out on potential millions of minutes of voice revenue. But in order to make best use of the Skype service, customers are likely to sign up for unlimited or high-megabyte data plans, giving carriers a big boost in data revenues as well as basic monthly service charges for the Skype bundle.

In fact, Skype may be the harbinger of carrier revenue models in years to come as all carriers contemplate transitioning voice to a VoIP platform. Vendors have already begun developing the network infrastructure with the uplink capacity and QoS necessary to support VoIP over 3G. Sprint and Verizon Wireless have both said they plan CDMA 1x EV-DO revision a trial next year with VoIP being the prime driver.

At the Congress Nortel rolled out its prototype high-speed uplink packet access (HSUPA) base station, which delivers upstream speeds over 1 Mb/s to compliments HSDPA’s downlink hefty downlink capacity. Other ancillary voice applications like push-to-talk over cellular (PoC) are already powered by VoIP.


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