Skype looks to developing markets for growth

Skype reached an agreement with Qtel to promote its service in Jordan and the Philippines

Skype is looking toward developing markets for its mobile business as the popular voice-over-Internet Protocol service seeks to grow its presence in places where smartphone use is less common.

While Skype can be used on Symbian, BlackBerry, Android, Palm and Windows 6.5 devices, those are not as prevalent in areas such as the Middle East, said Sravanthi Agrawal, communications head for Skype Mobile for Europe, the Middle East and Africa, on the sidelines of the Mobile World Congress.

To overcome that obstacle, Skype has developed a mobile client for lower-end phones that do not have Wi-Fi or 3G capabilities, she said. Plus, in many regions -- such as the Middle East, Africa and Central Asia -- 3G networks aren't built out.

Carriers install software on their servers to handle communications, which with high-end phones is done on the handset, said Mark Douglas, a Skype Mobile product manager. That also conserves more of the phone's battery.

Instead of relying on Wi-Fi or 3G connections, which can occasionally be unstable, Skype piggybacks on the operators' PSTN (Public Switched Telephone Network) infrastructure, which is more stable, Douglas said. The deal is good for operators, since the Skype client will run on all platforms.

Skype is targeting regions that it terms "calling corridors," Agrawal said, or populations with a high level of education and travel outside their own country, such as people in the Middle East and Latin America and countries such as Mexico and India.

Skype is hoping those people will eschew calling cards in favor of its service and buy SkypeOut minutes, which allow users to call landlines and mobiles. Operators benefit since those mobile customers will need to buy data packages in order to use Skype over the cellular network.

Skype "may not always be the cheapest option in every market, but on average, it tends to be very cost effective," Agrawal said.

Skype is also slowly making progress with operators, some of which fear Skype would take away international calling revenue. It already has agreements in place with Verizon, KDDI in Japan and Hutchinson 3G.

This week, Skype announced an agreement with the Qtel Group, which operates in 17 countries in the Middle East, North Africa and Asia. Qtel will promote Skype in Jordan and the Philippines through its Wi-tribe subsidiary, a mobile broadband operator. It also reached a call termination agreement with Qtel.

The promotion will kick off with Wi-tribe giving away credit vouchers for calls to landlines and mobiles. Normally, those calls would require users to buy SkypeOut credits. Computer-to-computer calls are free.

It's Skype's first deal with a Middle East operator. "We feel we have good proof points to show operators we don't cannibalize their revenue," Agrawal said. "We feel pretty good about the fact we can complement the operator's service."

But Skype faces issues in other areas in the Middle East where it has been blocked, either to protect home operators or for other reasons. In some places, the Skype's website is blocked, so users can't download it, although it will work if user can get the program, Agrawal said.

"I think one of the issues we see in that region is accessibility," Agrawal said.

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