The Empire Strikes Back - TeliaSonera vs Skype

A long time ago in a network far far away... We know Skype and we've celebrated its phenomenal rise to reach already about one in ten fixed landline phone owners on the planet. By offering "VOIP" voice over Internet protocol technology, and free calls when they are between Skype users, this is one of the big digital community success stories, no doubt.

But it was inevitable the fixed landline telecoms industry was not going to lie down and play dead. If you can't beat them, join them. If Skype uses VOIP, then anyone can use VOIP. And suddenly, a leading telecoms industry innovator like the Swedish giant TeliaSonera can bring all its assets to bear and actually "out skype" Skype. TeliaSonera has more assets it can bring to bear. Its one of the biggest fixed landline operators, mobile operators and internet service providers in almost every Scandinavian market.

On August 29 TeliaSonera Denmark launched its first product on the new UMA standard (Unlicensed Mobile Access). This is the latest iteration on what for example BT here in Britain launched as its Fusion phone (known in the industry as the Bluephone) or similar initiatives from South Korea to Germany. But TeliaSonera is the first to really offer full IP calls (VOIP) and full mobile network functionality on the same device. It remains to be seen can a regional giant like TeliaSonera now do the marketing moves to recapture this space. Certainly the mobile phone is far more addictive than any web service as proven by the Queensland University study in Australia last year. So certainly TeliaSonera has some assets that Skype can't match - and that have been poorly utilized in earlier plays in this space like BT's Fusion as it is an "MVNO service" - virtual operator on mobile.

Lets see. TeliaSonera is certainly a giant that has the potential to capitalize on this kind of opportunity. Only it is far too often that the big incumbents are not brave enough to execute such a change. We'll track this development and keep you posted.

Comments

[Sami]

Okay, I just have to give my two cents here:

- UMA is not, in my opinion, VoIP. It's GSM over IP.

- TeliaSonera is far from an empire or a giant.

Overall, UMA certainly has potential in countries where cellular coverage is poor (that's the #1 intended usecase after all), but in Europe where cellular coverage is generally excellent, it's main selling point will have to be cheaper calls. This may or may not work but is challenging in countries that already have low call prices (like Finland).

Meanwhile, let's see what kind of an impact the truly VoIP-capable devices like the Nokia N80 Internet Edition will have in a couple of years.

[Alex]

Contrary to the fixed Internet, there are so few VoIP capable mobile devices, that there is no money to make yet for TeliaSonera or anybody else.

So I'd say that TeliaSonera is not catching up with Skype but rather a few years too early in launching Mobile VoIP commercially.

Meanwhile Skype can earn a little money with fixed VoIP and TeliaSonera a lot of money with circuit-switched voice.

By the way, TeliaSonera had a fixed VoIP service in Finland, which reportedly could be more expensive than TeliaSonera's normal landline service.
The service is shut down now.

Alex

[Tomi T Ahonen]

Hi Sami

Good points. Lets see what UMA will become and I agree it will be a challenging market to make it work in Scandinavia with the low costs of practically all telecoms services already.

But I am VERY surprised by the comment "TeliaSonera is far from an empire or giant" ? Within its home markets Sweden and Finland it commands a bigger share of the total telecoms industry - fixed landline, mobile telecoms and internet - than BT or Vodafone in Britain, bigger than AT&T or Verizon in the USA, much in line with what France Telecom/Orange has in France or NTT and NTT DoCoMo in Japan or Deutsche Telekom/T-Mobile in Germany. I think very much so in Scandinavia, and much more than any other operators there - Telenor, Elisa, Tele3, Hutchison, etc - TeliaSonera is the only Scandinavian giant.

Thanks for writing.

Tomi :-)

[Sami]

Tomi,

You're right that TeliaSonera has a very large market share in Scandinavia - my comment stems from taking a global perspective; if you look at subscriber numbers globally, TS suddenly doesn't look so huge anymore.

[Tomi T Ahonen]

Hi Alex and Sami

Alex - good points. It is the start of the episode of the Empire Strikes Back ha-ha, yes handset availability totally matters in this contest.

Sami, ok, I understand. And yes, even if we combine all their subs in Scandinavia, TeliaSonera would be only the 31st largest mobile operator. So in that way, yes far from the big boy in the industry ha-ha..

Thanks for writing !

Tomi :-)

[lee dryburgh]

There is not even the most basic details here to make any judgement.

Take for example BT Fusion. Even a prelimary exposure of some less than marketed details show it is a disaster. One number so can't split business and family. All inbound calls including from family when you are at home are charged at mobile rate. You must have a BT line subscription (!), broadband must be from BT (!) and you must throw your cellphone+SIM away and take out a subscription with BT Mobile (!). And what do you get in return? A Motorola phone and outgoing calls at 5p/min (5 times more than I pay fixed line in the UK via call18866.com).

So come on, before the big headlines we need enough preliminary details to make any kind of speculative judgement.

[alan moore]

Hi Lee,

Its whats called a lockin. The trouble there is no after hourss beer! :-)

Alan