Tag: 3

Hutchison’s 3 has had a Skype service under its X-Series for a while now but they have now announced the launch of a dedicated Skypephone, which they developed jointly with Qualcomm (to make use of some specific CDMA features) and Skype and which has dedicated Skype buttons. It is said to being produced by Chinese manufacturer Amoi. The service rolls out in the UK and Ireland from this week and will move to 3’s other territories (Austria, Australia, Denmark, Hong Kong, Italy and Switzerland) thereafter.

The move manifests where 3 sees the future value, and it is not in being paid by minute of voice used. The value clearly lies in mobile data. Now, granted, this is easier for 3 to achieve than for many other operators: 3 started as a 3G operators straight away. Their entire network is high-speed, they don’t have any old black-and-white devices hanging around anywhere, etc, etc. However, what it does show is a gutsy approach to break with tradition amongst network operators.

Can the situation be compared with the change from dial-up, pay-per-minute Internet to unlimited broadband? It probably can to an extent. What was the result of that? The change of a commodity-driven business model (bandwidth) to a service and product-driven one (e-commerce, advertising, etc) with the subsequent reduction of previously mighty ISP to mere bit pipes that delivered the data but were otherwise largely interchangeable. This is also the sore spot for network providers because they fear that this will happen to them, too. According to reports, a Skype spokesman reported that Skype was usually told to “go away” by operators, noting “obvious tension”.

I would submit though that there is actually less to fear for network operators than there was for the traditional Internet ISP because the billing relationship is – as yet – harder to replace for mobile customers than it was for the Internet customer. I believe this to being the case because of two reasons, namely a) the perceived security (perceived because it does not necessarily reflect reality), and b) the limited input mechanisms of mobile devices (punching in credit card details via your mobile’s number pad is a proper pain in the neck and nothing consumers will like to do). Due to restrictions of the screen and device size, this remains the case even if one uses smartphones with a Qwerty keyboard or touch-screen devices.

The above will not guarantee the operators’ spot forever but it will certainly make life easier for another couple of years. But then? Well, you better be well-positioned for when the inevitable happens: with most operators already starting to open data services, it can surely only be a question of time until a more liberal approach to what their customers are and are not allowed to use will appear; consumers may well ask what added value an operator had to offer.

3 UK CEO, Kevin Russell, does then expect initial “detractions” from its revenue but hopes to make up for it by adding incremental customers, not only through new additions but also reduction of churn and increased loyalty.

3 does what it has shown to be good at, namely leading change from the front: it has shown that it can sell more content than competitors with many times its market share, and whilst it might all be born frmo sheer necessity (where else would 3 turn to survice), it is good of them to again putting pressure onto the others.