- @ MWC: Skype To Carriers: You Need Us Too, You Really Do

Dianne See Morrison
Wednesday, February 18, 2009; 2:00 PM

Carriers have traditionally ruled the roost in the mobile world. When the iPhone came along, they were forced to concede that device makers?or at least some of them?were as important as they were. Now, software providers are clamoring for the same status.

A day after his company announced that it had struck a distribution deal with Nokia (NYSE: NOK), Skype CEO Josh Silverman took the stage at the Mobile World Congress to declare that it's "application providers like Skype that are driving demand for the next generation of access."

Skype's deal with Nokia?to pre-load its software on the Finnish handset maker's upcoming N97 device?is clearly seen as a threat to carriers. The challenge for Skype, and all other mobile application providers for that matter, has been getting users comfortable with downloading applications onto their phones, a process that isn't always so simple. When the software is on a device, uptake climbs, usually dramatically. But as Silverman concedes, these deals, and last year's one with UK carrier 3 to introduce a Skype phone, which comes with a huge Skype button smack in the middle of the phone, have "raised eyebrows."

Silverman came armed with data from its 3 UK experience?Skype signed a deal with the UK carrier to introduce a Skype phone that comes with a huge Skype button in the middle of the phone?to show that Skype could actually benefit carriers rather than "cannibalize" their revenues. He said 79 percent of those who bought a Skype phone were new customers to the UK carrier; 75 percent of those buying a Skype phone saw the application as the main reason they stayed with the network; and, more importantly, average revenue per use (ARPU) among Skype phone users was 20 percent more than the network's average customer.

But Sol Trujillo, CEO of Australian carrier Telstra, was unconvinced. When asked if Telstra would be adding Skype as a service, Trujillo said: "It probably worked well for the carrier involved, but I have a responsibility to make money." Trujillo said that Telstra already offered Skype-type services such as video calling that "have some of the highest ARPU in the world, and some of the highest growth in the world," adding: "and we make money." Meanwhile, judging from the laughter and then loud applause that Trujillo got for his remark about his responsibility to make money, Skype's not convincing many others about their equal importance in the eco-system either.

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