Tuesday, March 30, 2004

Daiwa EuroTelcoblog No. 20 Thursday, 5th February - TeliaSonera launches broadband telephony in Sweden/Skype on CNBC (original email blast 10:51 AM, Thursday, 5th February, 2004)

TeliaSonera launches broadband telephony

Anyone with the stamina to make it to page 104 of our recent sector piece will recall that, on our multi-factor company rating sheet for TeliaSonera, we gave the company a 1 rating for adaptability. Today brings another development in support of this view. The company has just announced this morning that it is to launch a SIP-based broadband telephony service in Sweden, branded Telia Broadband Telephony.

Like the BT Broadband Voice service announced last year, it is an operator-independent service, and it appears to us that the company may be trying to use it to reclaim some revenue share among users of the municipal fiber networks and CPS customers. Also as with BT, the charging structure is set so as to avoid cannibalization - calls to fixed and mobile numbers are charged at the standard rate. And unsurprisingly, TeliaSonera, like BT, does not mention that once the service sits on a device, it is mobile, allowing for some interesting price and location arbitrage opportunities (such as making calls at Swedish national rates from a hotel in Sydney). However, there are also some interesting differences between this and the BT Broadband Voice product:

TeliaSonera is employing a softphone client, rather than an analogue telephone adaptor, which makes it a PC-to-PC service.

TeliaSonera has leveraged more of the capabilities of SIP, including video telephony, instant messaging and presence functions in the service offering.

On-net calls are free, which is common practice among the independent SIP service providers in the US, but a feature which BT has so far opted not to offer.

There is an upfront activation fee of SEK250 (EUR27) and a monthly fee of SEK80 (EUR8.70). Given some of the prices and services already available in Sweden (see our sector note) we are somewhat skeptical about the attractiveness of the activation fee, though the monthly fee is 19% below that offered by B2 for its telephony service.

Beyond the revenue opportunities that TeliaSonera may see in such a product offering (we think marginal), we think the early attack on the SIP front will provide a valuable learning experience for the company, and also may have an element of pre-emptiveness about it. We understand from Jeff Pulver's excellent Pulver Report that a Norwegian start-up is planning to launch a Nordic regional SIP service this year. We are trying to find out more on this development, and will follow up on it and the TeliaSonera development in our upcoming global monthly.

Skype on CNBC

As far as we know, Skype has not spent a penny on marketing since it was created, but the media machine is certainly working overtime, raising awareness of the VoIP threat in all its manifestations, in our view. It has come to our attention that co-founder Niklas Zennstrom will be doing a live interview with CNBC tomorrow (Friday 6th February) at 6:50 AM EST (11:50 London, 20:50 Tokyo). TV worth watching, we think.

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