Skype, Hutchison 3G partner on VoIP

World's first commercial VoIP service for mobile phones on the cards

Skype Technologies and the Hutchison 3 Group (Hutchison 3G) are to work together on what could become the world's first commercial VoIP service for mobile phones.

"Until now, we've been primarily focused on PCs," says Skype Chief Executive Officer (CEO) and co-founder Niklas Zennström. "But our customers want a more ubiquitous experience. And, with a service for mobile phones, we plan to deliver this."

Hutchison 3G, which operates IP-based mobile broadband networks in several European markets, will become one of the first mobile phone operators in the world to embrace VoIP, a technology many in the industry view as a major threat to their cash-cow voice business. Telecom New Zealand has a partnership agreement with Hutchison Australia to share information on 3G services.

The group, a subsidiary of Hong Kong-based Hutchison Whampoa, sees more opportunities than risks in venturing into VoIP, according to Christian Salbaing, managing director of European Telecommunications at Hutchison 3G.

"We want to give our customers more choice," says Salbaing. "We think they'll be thrilled to use Skype."

In a first step, the two companies will test the technology on the Hutchison 3G network in Sweden before rolling out trials across its other markets, which include Austria, Italy and the UK, according to Salbaing.

Users will require smart phones with some SIP (Session Initiation Protocol) capability, which is required for VoIP service, says Ed Candy, technology director at Hutchison 3G UK.

Hutchison 3G's mobile phone networks are more capable of providing VoIP service because they are IP-based at the core, according to Candy. "If you have a legacy network based on circuit-switched GSM technology, you're going to have more difficulty," he says.

The question that begs an answer in this unusual match of partners is: what's in it for Hutchison 3G? Why give away minutes for free when you can charge money for them?

"We aren't giving away anything," says Salbaing. "We can't talk pricing right now but we will be looking at various ways of bundling Skype into our other services. Maybe we'll offer monthly subscriptions in some countries, or bundled minutes, as we do with text messaging and email. The main thing is, we aim to generate new business."

Skype is in talks with other carriers, according to Zennstöm. "We're network agnostic," he says. "We want Skype to be everywhere."

Zennström declined to discuss commercial arrangements with Hutchison 3G, saying only that Skype is also in business to make money.

Whether Skype can break into the mobile internet market as it has done arguably well in the fixed-line sector remains to be seen.

Hamid Akhavan, chief technology officer at T-Mobile International, says VoIP service over mobile networks is still a "several years away," citing issues as security and quality of service.

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