CNet reports that Skype and Nokia announced their partnership at the GSMA Mobile World Congress in Barcelona. The software for Skype’s Internet calling service will now be integrated on some of Nokia’s high-end smart phones. The first model to have this facility will be the N97, which is slated for a June release. The Skype service, however, will only be started in the third quarter of the year.

Once the service is started it will be integrated into the address book and users will automatically be able to see which of their Skype contacts are online. They will also be able to use its instant messaging service. This facility will enable N97 users to make calls over the Internet irrespective of whether they are using a 3G cellular network or a Wi-Fi network. All Skype-to-Skype voice calls will be free, while Skype to landline or mobile calls will be at low rates.

Sony Ericsson also announced a deal with Skype. Sony will provide a Skype panel on the Windows Mobile Xperia1 handset.

While this is great news for consumers, especially those who need to make frequent international calls, mobile network operators are not likely to be thrilled with this development. Free and low cost international calls via Skype would mean lower revenue generation for their own networks.

It is not impossible that networks such as AT&T, Verizon or T-Mobile may require the Skype service to be discontinued from handsets using their networks in the U.S.A. Three UK is one of the only major networks to have forged a relationship with Skype.
Skype’s chief operating Officer Scott Durchslag says that though they are starting this service with the high end phones, it will also be made available on mid-tier handsets in the future.

When they discontinued the mobile video service, a spokesperson for 3 had said, “Mobile advertising remains an important part of our strategy. This change has created a great opportunity for a new supplier and we’ll be looking at options over the coming months.”

They now appear to have fulfilled that promise. 3 has now tied up with Mobix, which will deliver real-time in-video advertising, and 4^th Screen Advertising, which will be their sales partner, to restart their mobile video service before the end of the year.

The 3 million subscribers of 3 will now be able to receive personalised advertising from various brands, with the option of demographic targeting and frequency capping.

3 UK will begin with news, weather updates and movie reviews, and follow it up later with comedy music and cartoons. 3′s earlier entertainment and information services, mobile games, and full length music downloads will of course continue.

Videos will range from being free to costing up to 50 pence each, depending on the length and type.

3 UK’s Head of Portal Advertising, Neil Andrews says, “By allowing people access to video content at a consumer friendly price we can offer brands a potentially massive target audience.”

Mark Slade, Managing Director of 4^th Screen Advertising says, “Pre-roll video advertising is highly targeted, enabling campaigns to be far more effective, whilst reaching the right customer demographic at a time that suits.”

Read the full 3 UK official press release

Ads run before and after videos on the service. While Sony BMG provides the music, Rhythm New Media is in charge of selling and serving the ads. The music video service was officially launched on the 31st of March. According to 3, the response to their free-to-access mobile video scheme has been excellent, with about 1 million users (25% of their clientele) signing up for the service by October 2007.

Signing up for free ad-funded music videos on 3 is quite simple. When a subscriber wants to start using this facility, he/she needs to simply visit the 3 music page, select the ‘opt-in’ option on the mobile screen, enter their age and gender.

Users can browse to select videos. A short pre-roll ad gets displayed before the video plays, followed by the music video the users selected and after that a post-roll ad gets played. In order to encourage customers to use this service without fear of exorbitant data charges being levied on them the word ‘FREE’ is prominently displayed next to each link.

Ads are shown to suit the demographic profile of the user according to the gender and age group they specified when opting into the service. Hence different users may see different ads before and after the same video. In order to check the efficacy of the system, a special link is provided on the main page for viewers who may be interested in participating in a survey that asks users of the service what brands they think they have recently seen being advertised on their mobile, what ads they have seen and the main message of an ad that they were shown.

Responses to the service have been very encouraging, with viewers viewing 3 videos per day on an average. 25% of them had spontaneous ad recall and 75% reported total message recall. 95% of users are happy with this service. Some top brands like Microsoft, Unilever Lynx, Nivea and Paramount pictures have already advertised through this format.

3 Official Press Release

The UK is an important advertising market, and most of the big mobile providers operate there. The initial testing of this project will therefore be carried out in the UK. The aim is to set up a television-style rating system for mobile ads. The working group will set out a range of metrics to decipher exactly who the mobile audience is and what their areas of interest are. The group will also collect and deliver information from the UK operators to analyze the feasibility of the measurement system.

Advertisers will benefit from this project as it will help in judging the effectiveness of mobile ads. So far the lack of availability of concrete data backing mobile advertising has been a major stumbling block, as advertisers obviously want to know whether or not their ads are reaching their target audience.

Providing good quality data has been difficult so far because mobile advertising is a relatively new field, and operators still do not know exactly what data is required by the channels and how the relevant data can be collected and disbursed while maintaining client confidentiality.

Information collected as a result of this initiative will have to be made available across different operators. The data may also need to be audited by a centralized body to ensure client privacy is not breached. The GSMA, which represents over 700 companies across 218 countries, is ideally placed to lead such a project and should be capable of uniting the normally rival organisations.

Rob Conway, CEO of GSMA says, “The working group and the GSMA facilitate crucial engagement between mobile operators, advertisers and agencies, to help ensure that mobile advertising realizes its full potential for the benefit of all players in the ecosystem.”

While most see this as a positive step forward for the mobile telecoms industry, Julien Theys at Screen Digest thinks this is a “defensive strategy” by the telecom companies to one-up Google.

According to eMarketer the mobile advertising industry will rise from $i.5 billion in 2006 to $12 billion by 2011. Phil Chapman, director of marketing T-mobile UK, says “The power of the mobile as a marketing tool can only be realized if advertisers can clearly see and understand the benefits compared to traditional media.”

Read the official press release by the GSMA

According to the report, Skype will be teaming up with mobile operator 3 from the end of November. They will release a fully integrated mobile phone that will mean free mobile to mobile phone calls for anyone swapping networks.

This should be good news for 3. Providing free mobile to mobile calls from anywhere in the world, in association with Skype, could cause all the other operators enormous pain.

Rattling the competition

Speaking to the BBC, Per Lindberg, a telecommunications and IT analyst at investment bank Dresdner Kleinwort said, “Whether they win market share depends completely on their competitors’ reactions.” He thinks a move such as this could prompt all the operators to cut their prices, “If Vodafone or Telefonica move to ‘all-you-can-eat’ then the situation may change.”

Skype’s phone could even be a threat to other new entrants such as Apple’s iPhone or Google’s rumoured GPhone. Sprint Nextel could also take over Vonage and integrate VOIP services into their products even more seamlessly than Skype can.

Three is the mobile business of Hong Kong based Hutchison Whampoa, better known in Asia and the USA for Hutchison Telecom and the Harbour Plaza hotel group. Skype was acquired by Ebay back in 2005 for $2.6 Billion. Recently, though, Ebay was publicly dissatisfied with Skype’s performance, when it was forced to announce to shareholders that it would have to pay an impairment charge of $900 million because it had over-valued the group.

If the Skype – 3 deal delivers on promise, it could prove to be a turn-around point for Skype as well as the sagging VOIP industry on the whole.

BBC Report: Skype teams up with 3