Enter the Skype phone

Skype today unveiled its long-awaited VoIP phone, a mobile handset that uses the data capabilities of the mobile network to bypass an operator’s circuit-switched network entirely to make free calls over the Internet. Such a device would seem anathema to wireless carriers that still rely mightily on their voice revenues. But instead of appropriating a carrier’s network, Skype is partnering with an operator, announcing the phone will be initially offered by the U.K.’s 3 and eventually on 3’s other networks throughout Europe and the Pacific rim.

The slim candy bar 3 Skypephone dials into 3’s UMTS network, accessing Skype signaling and VoIP servers the same way a broadband connection over the wired world would. 3 has actually supported Skype’s service for some time, selling it as a service on its high-end X-Series devices. Skype has also made it onto other operators’ networks as an installed application on smartphones, but the new Skypephone is the first time the service has been packaged in a mid-range phone with dedicated software closely integrated into the device itself as well as a dedicated Skype button to access the service.

Europe has a much more developed direct retail market for phone, and Skype could feasibly sell the unlocked phone directly to consumers, who could then insert their operators’ SIM cards. But the data bills for customers would be astronomical considering that most of them charge per the kilobyte for data services. Thus the partnership with 3 is critical. 3 has agreed to allow unlimited calling for customers who sign up for a monthly data plan, topping the service out at 4000 minutes a month.

“Now here comes 3, not only encouraging its customers to use VoIP, but bending over backwards to make it easy for them,” Ovum analyst John Delaney said in a research note. “That this initiative is being taken by 3 is no coincidence, of course. As the smallest and newest of the U.K. mobile operators, 3’s best hope for growth is to disrupt the status quo wherever it can.”

While 3 may be a big win for Skype, the operator may prove to be the exception in a carrier community still concerned with protecting its voice revenues. Hutchison 3G, which owns the 3 companies around the world, launched as a 3G only network after acquiring UMTS spectrum in all of its commercial markets, and it has focused primarily on driving data revenue on the new networks. Most operators are supplementing their core GSM networks with UMTS data and may not be so keen on nullifying their legacy infrastructure. And 3 itself may run into its own strategic business problems if it allows outside providers to co-opt ever essential service on the phone, Delaney said.

“Imagine the scenario: on your mobile phone you use Skype for phone calls, Hotmail for messaging, Google for search and directions, YouTube for TV and music.” Delaney said. “What do you need your mobile operator for? The answer could turn out to be: subsidising phones, carrying data packets, and dealing with problems and complaints. Does that add up to an attractive business?”

Skype designed the phone in partnership with Qualcomm, allowing it to integrate the VoIP architecture directly into the UMTS chipset, Skype officials said. The phone in its current incarnation works on dual-band European frequencies, not yet supporting the PCS and AWS bands by U.S. UMTS operators.