Announcement about billing partnerships usually go unnoticed, but Skype’s recent selection of MACH to enable direct billing caught our attention. With the new billing platform, which gives mobile operators the option to provide users a consolidated bill that includes Skype credits paid via their mobile phone bill or pre-paid account, Skype users will also be able to purchase Skype credits from desktop PCs and mobile devices. Direct operator billing will maintain the same price points as current payment methods used for Skype credits, ensuring a consistent user experience.
Skype credits are used to pay for calls to mobiles and landlines, text messages, and group video calls using Skype’s network. As an “over the top” provider, Skype’s services are accessed from a wireline or wireless broadband connection. Skype does not charge for video and voice calls to anyone else on Skype or for instant messaging and file sharing, although data charges may apply for the carrier’s broadband connection. Skype is owned by Microsoft.
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Neil Ward, general manager for business operations at the Skype Division of Microsoft, commented in a statement: “Delivering a strong user-experience has been at the heart of Skype’s adoption by millions of users globally, and we want to extend this philosophy to the payment options we provide. We expect ease of payment to attract new users, while existing users will become more profitable customers as they increase their spend with us.”
Our observations: When Skype was first introduced as an “over the top” VoIP provider in 2003, it was a threat to voice providers because it offered free voice calls that bypassed the traditional voice network, cutting into telco revenues. However, with the wide-scale adoption of unlimited voice plans, Skype is much less a threat to voice carrier revenues and it may even represent an opportunity for additional data revenues, particularly for mobile carriers that may want Skype’s video service as a application to drive demand for mobile broadband.
Another interesting twist is how Microsoft plans to integrate Skype into its various software products. When Microsoft first announced plans to buy Skype, one of its stated objectives was to integrate Skype across various Microsoft platforms; at the January 2012 Consumer Electronics Show Microsoft confirmed it is making progress across multiple platforms. Microsoft is also developing its next-generation mobile operating system (Windows Phone 8) to easily accommodate Skype and other VoIP applications.
What remains to be seen is if carriers will continue to see Skype as a threat to baseline voice revenues or if they will see Skype as another application that can drive revenue-generating demand for wired and wireless broadband.
