3 Skype: Is This the Future of Mobile Voice?

The price of voice and data continues to decline, driven in large part by competition and consumer price sensitivity. Even though most Americans still don't have a data plan, that will change in a relatively short period of time. The price and penetration of mobile data plans is the single "X variable" in the entire mobile Internet adoption mix. Handset type is important but not as important as eliminating cost uncertainty for users. 

As we've argued in the past, an unlimited data connection will one day be more important than voice to mobile users. But US carriers have so far declined to allow users to buy data-only plans, because they want to preserve voice profits and move subscribers "up" to data as well. Accordingly, the carriers have largely resisted VoIP services such as Skype because they fear that it may lure people away from voice plans to minimal voice and data or data only (assuming that were available). That's an "empirical question" but on another level they're resisting the inevitable. 

skype phones

This past week UK operator 3 (a unit of Hong Kong based Hutchison Whampoa) announced free Skype-to-Skype voice and IM:

In a world first, 3 UK has opened up its network to allow anyone with a 3 SIM and a compatible 3 handset to enjoy unlimited Skype-to-Skype calls and 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 network.  Anyone with a 3 handset will be able to buy a 3 SIM with Skype enabled 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 to make it possible for anyone with a compatible 3G phone 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 instant message (IM) service.  

By removing access and pricing barriers to Skype-to-Skype calls 3 UK is creating a compelling reason for new customers to join 3 and to enjoy all the services available on the UK’s biggest mobile broadband network.

In the 3-Skype program, it's about Skype to Skype, not Skype-Out or In. You can make Skype-Out calls to other countries, but in the UK to make calls to non-Skype handsets or landlines you have to use a 3 voice plan. That's how the operator has struck a balance here and prevented its voice minutes from being entirely substituted by Skype's services.

Reportedly 3 UK has found Skype users churn less than non-Skype users and in fact use more traditional voice minutes than non-Skype users. They also use more data as well. So it may be the case that the feared scenarios described above don't come to pass when VoIP is more directly embraced.