U.K. operator 3 working on low-cost 'Skype' phone

A spokesperson for the London-based company, known simply as 3, said it and a "leading Internet communications company are working together to produce an exciting new product to make free Internet calls completely mobile." The unnamed company is widely believed to be Skype.

3 is not releasing further details on the product.

According to some reports, 3 and Skype will team with an Asian manufacturer to produce a low-cost mobile device that will work with the service.

3 has offered cell phones loaded with Skype for some time, as part of its X-Series offering: a bundle of Web content and services accessible via mobile devices for a flat fee.

While 3 has embraced Skype, other mobile companies have sought to stymie mobile VoIP, fearing it may diminish their regular wireless-calling revenues. U.K. VoIP provider Truphone, for example, earlier this year accused local operators--including Vodafone Group--of blocking access to its service.

Nokia, the world's largest handset maker, has nonetheless adopted the VoIP technology, albeit in a slightly different incarnation. The Finnish company has produced a number of mobile phones capable of making calls over both cellular and Wi-Fi networks.

Operators around the world, including BT Group in the U.K. and T-Mobile in the U.S., have sought to capitalize on such devices with the launch of FMC (fixed/mobile convergence) technology, which routs calls via mobile networks when a customer is outside the home, and over the user's broadband connection when at home, using a single, dual-mode device.

3 has previously been skeptical of FMC. The operator's strategy director, Bruno Duarte, said last year: "Whether we need the complexity of FMC, we're not sure...Yes, some people will want it, but we believe it's going to be fairly limited."

Jo Best of ZDNet Australia reported from Sydney.