Skype on the iPhone - Will it make a difference?

Hugh Griffiths — Tue, 31 Mar 2009 14:34:00 GMT

Today it was announced that the Skype client is now available on iPhone via the apps store. Given the significant success of the iPhone apps store will this become one of its top applications, or will it be consigned to the ‘long tail’ of the store? On the face of it combining the success of the store, the high utilisation of web browsing on the iPhone device (despite the recently published Zogby survey on mobile browsing) and the success of Skype on the web the future looks bright.

However Apple places its device in the market subsidised by the network operators and therefore it is not a surprise that (for now) Skype to Skype calls or Skype to mobile (and landline calls) require a Wi-Fi connection, thereby protecting network operator revenue. In any case the consumer would have already had to sign up to a £35-£45/month contract from O2 in the UK market, (unless they had secured an unlocked device) giving them a ‘big bucket’ of calls and little incentive to look for free.

However a couple of thoughts will act to counter this. Firstly not only is Wi-Fi now prevalent (O2 having helped the market on its way by signing a deal with the Cloud and Openzone in 2003 to offer Wi-Fi to O2 customers), but many users can also run up hefty call costs and may well look to offset call charges (in particular those making international calls). Additionally and here’s where I think we potentially will see the biggest impact, the client also works on the iPod touch. So, free calls on a popular non network tethered device with few ongoing call costs – I can see a significant demand for that.

Digital Britain for Mobile ?

Hugh Griffiths — Tue, 24 Mar 2009 17:42:00 GMT

Yesterday’s news from the Mobile world included the network sharing agreement between Vodafone and O2Telefonica in UK, German, Spain & Ireland. Last week we also saw the announcement of Orange outsourcing its UK infrastructure to Nokia Siemens Networks. On the one had these moves signal the mobile industry moving in the direction that both the EU and the UK government have been calling for in recent months; however these changes are being driven by the harsh economics of running a network.

The Communications Sector is one of the three largest sectors in the UK economy alongside energy and financial services with the digital economy accounting for around 8% of GDP. In January the Dept for Culture, Media & Sport published an Interim Report entitled ‘Digital Britain’ to assess the UK’s readiness to fully to exploit digital technology as Britain recognises the future importance of digital in competitiveness and ultimately wealth creation. The government report highlighted 5 proposals in 'Modernising radio spectrum management'. However almost a decade after the auctions for the 3G licenses the technology has not delivered the data revenues that each of the five bidders had expected. As a result, and given the current economic situation, they may be less bullish in their assumptions and investments second time round. Greater network sharing was the fourth proposal. At the time it was thought that this could be problematic as the networks were suggesting that there were still advantages that the network itself can provide that can influence the customer's choice of operator (e.g. coverage). However Matthew Key (CEO Telefonica Europe) made a statement on the developments yesterday that suggested otherwise;“We are actively exploring additional areas for cooperation and, by reducing our costs in areas of the business that customers don’t see; we can ensure that we invest in areas they truly value." This suggests that customers no longer truly value the network, that it is seen as a ‘hygiene factor’ in their decision when they think about a network provider. Matthew is rather smarter than that and knows that the work O2 have done in the last few years to improve network quality is providing dividends. There will be no let up in network quality as the result of any network sharing agreements. The announcement yesterday is significant as prior to this point only 3 agreements that existed in the UK market (O2 & Vodafone for the Highlands of Scotland, 3 & T-Mobile for 2G and GPRS, and Orange and Vodafone for 3G). The third proposal for greater investment certainty for existing 3G operators, including the possibility of changing from time limited to indefinite licence terms would be welcomed by the network operators. The 3G auctions cost them a collective £23bn for their fixed term licenses and anything to reduce future investment will be welcomed. So whilst the network operators are acting upon one of the DCM&S’s recommendations two others may be more difficult to swallow. The first proposal is to resolve the future of existing 2G radio spectrum through a structured framework, allowing existing operators to re-align their existing holdings, re-use the spectrum and start the move to next generation mobile services. This would require the rationalisation of spectrum holdings across the two different frequencies for 2G; 900Mhz (for Vodafone and O2) and 1800Mhz (for Orange and T-Mobile). These I see will require some very difficult negotiations between the operators and OFCOM and the trading of frequencies, together with the huge upheaval associated with the network infrastructure to bring about any eventual move. The second proposal is making available more radio spectrum suitable for next generation mobile services. Ofcom has proposed the release of the so-called 3G expansion band at 2.6GHz. (Dubbed 4th generation or High Speed Digital Access). Whilst vital to the long term success of Mobile services this may well require some ‘horse trading’ associated with negotiating positions in the first proposal above in order to reach a resolution. In any case again this process will take some time to bring about a resolution. And finally the fifth proposal was prompting operators to extend network coverage. This has been a stumbling block as returns have not been made in some densely populated areas, so extending into areas with the prospects of a lower return is not compelling; however network sharing may provide the key. In summary the Interim report entitled ‘Digital Britain’, is just that, interim. Far more work and detail is required from the DCMS and real cooperation from the operators themselves specifically regarding the allocation of existing spectrum and allocation of the 3G expansion band is required. These negotiations will be tricky and ate likely to take a number of years to complete but ultimately they will be necessary in order to deliver a real step change in the provision of broadband services on mobile and true mass market adoption of always on high speed services.

Hugh Griffiths on mobile

Skype on the iPhone - Will it make a difference?

Digital Britain for Mobile ?