Facebook Skype arrangement to force telco's hand on mobile rates: Ovum

Facebook Skype arrangement to force telco's hand on mobile rates: Ovum

Analyst firm says Aussie telcos forced to cut prices while Skype will eye the enterprise via Microsoft

Australian telecommunication providers may be forced to look at other revenue streams and cut calling rates in the future as Facebook and Skype begin offering free video calls, according to analyst firm, Ovum.

Skype, now owned by Microsoft, signed the deal with Facebook in order to offer its services to the estimated 750 million active users of the social networking site.

Ovum senior consultant, Craig Skinner, said that at present, Skype has around 125 million active users per month so there was the potential for video calls via Facebook to be taken up by "an order of magnitude".

"The traditional premium services such as voice or SMS on mobiles is a revenue stream that is going to be harder for telecommunication providers to sustain going forward," Skinner said. "That has been eaten into by social networking instant chat or IP based products such as voice over IP [VoIP]. All the carrier is doing is carrying the bits which are than included in a monthly usage plan and it's not earning those incremental higher value revenues that companies would traditionally get."

However, it was not all doom and gloom for telco providers as users would still need a fixed connection as the National Broadband Network (NBN) was rolled out and people changed over to IP. "Consumers will still have a fixed connection but they won't be paying for calls in the traditional high price way," he said.

In the long term, there would also be an impact on retail prices and this would affect both fixed line and mobile calls meaning a "win-win" situation for local consumers, according to Skinner.

In response, a Telstra spokesman said that its fixed line business faced a range of challenges including VoIP products and fixed to mobile phone substitution.

"Importantly, while we've seen a migration to mobile and IP products, our fixed line business is still very relevant to many customers," he said. "These products can be seen as complementary rather than a substitute."

Skinner added that one barrier Skype may face with consumer adoption of video calls was Facebook's continual changes to its privacy policy with applications such as automatic facial recognition on photos drawing the ire of some users.

"Facebook has had a number of privacy missteps over the years and it's something that has meant a small number of users have decided to delete their accounts or not join the site. The creation of Google+ [a rival social networking site] will give Facebook the competition it needs to fix its privacy problems."

In addition, there was an opportunity for Microsoft to expand its collaboration suite and incorporate video communication as part of its overall offerings to the enterprise, said Skinner.

"We can also expect to see a product coming out from IBM to try and fit the gap in their [Lotus] product suite as well. It will be a faster move for IBM to look at a partnership or acquisition of a video conferencing company rather than try to do something from scratch themselves."

Vodafone and Optus have been contacted for comment by Computerworld Australia.

Follow Hamish Barwick on Twitter: @HamishBarwick

Follow Computerworld Australia on Twitter: @ComputerworldAU

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