Skype uses a broadband Internet connection to place a voice call, cutting out the telephony network for which telecoms operators charge by the minute. Skype calls to other broadband-connected Skype users are free, and Skype calls to normal phones are inexpensive.
If a cell phone customer had an inexpensive data connection, then using Skype to make long distance calls, especially, could be at substantial savings--but so far there are few such cheap data plans.
The company recently unveiled a version of Skype, running on a Nokia phone, that works on the third-generation wireless broadband network that is owned by 3, heightening anticipation that Skype would soon become available for more mobile phones. 3 is the Hutchison Whampoa-owned network in Britain.
But Eric Lagier, in an interview at the Consumer Electronics Show here, said that while development work is being carried out, most of the other telecoms network operators had not yet created attractive flat-fee wireless broadband packages that are needed to take full advantage of Internet calls.
In fact, most carriers charge significant amounts of money per megabyte downloaded and sent to a mobile phone.
"We don't want to be in a situation where we say: 'Skype is free' and then at the end of the month the user gets this huge broadband bill," Lagier said.
Wireless operator 3 is a rare case of a mobile network carrier which has opened up its fast network at relatively low prices. For 5 pounds ($9.69) per month, a subscriber gets unlimited Skype calls, as well as unlimited Internet access, Podcasts and Windows Live Messenger.
"You can now make Skype calls at home, at work or on the move," said Lagier, adding that moves by operators like 3 put pressure on other mobile operators to rethink their wireless broadband pricing strategies.
Even if consumers would want to use Skype on another telecommunications network, the software would not work on it. The reason is that it was developed to run on a specific part of the 3 network which requires cooperation from the carrier, Lagier said. "We use a voice channel as the bearer of the call."
Other companies are already jumping in the gap Skype is leaving open. British start-up Truphone, which operates from an organic farm south of London, is offering Internet calling software as a free download, initially designed for Nokia phone.
It targets phones that also have a Wi-Fi wireless broadband connection, such as the N-Series models from Nokia. When phone users are in a Wi-Fi hotspot, which can be their home, office or public hotspot, they can use it to make free calls to other Truphone users, or at low costs, to normal landline phones.
When they are outside the hotspot area, they can use the phone as a normal cell phone.
Skype software is also available on Wi-Fi phones, which have been designed specifically for Skype, but these phones cannot make calls on a cell phone network.
Skype, which has more than 5 million users online at any given time, was acquired by eBay for up to $4.1 billion last year.