LONDON Oct 12 British mobile operator O2 is
testing free voice and text services on wi-fi networks, going
head to head with services like Skype that offer free calls,
which many operators have sought to block.
The service, called O2 Connect, will initially be available
on Apple and Google's Android smartphones to
1,000 customers, with a view to launching a commercial service
next year, Telefonica-owned O2 said on Wednesday.
"This trial will allow us to explore the potential of
delivering VoIP (Voice over Internet Protocol) services to
customers," said Richard Porter, O2's head of consumer products.
The company said that in a commercial product, some parts of
the O2 Connect service would be included within existing
pricing, while others would be sold as extras.
Internet protocol services, typified by Skype, which
Microsoft is buying for $8.5 billion, offer free voice
and video calls routed over Internet networks.
O2 said the service would not need any additional log-ins
and would not require the receiver of the call to be signed up,
both of which were key advantages over existing VoIP services.
Analysts at Fitch said the plan highlighted a challenge for
network operators: overcoming the commoditisation of voice calls
-- a process that was being facilitated by declines in the rates
mobile operators charge one another for connecting calls.
Damien Chew, senior director in Fitch's TMT team, said: "A
key barrier to free voice at present is mobile termination
rates, which remain high compared to landline rates."
"However, regulatory pressure has and will continue to drive
these rates down. The lower they go, the more attractive free
voice as a loss leader becomes to a variety of market players,
beyond just Internet call companies. This will translate into
more downward pressure on voice prices."
Fitch said the product could be a brand differentiator, and
any negative price implications would be further mitigated by
the practice of bundling voice, SMS and data for the UK's