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How Microsoft, Skype, Nokia can rule: Cut out obscene data roaming rates abroad

Summary: Microsoft Chairman Bill Gates stumped for the $8.5 billion Skype purchase and international domination may be a good reason for the enthusiasm. Microsoft, Nokia and Skype could be deadly to data roaming charges.

Larry Dignan

By for Between the Lines |

Microsoft Chairman Bill Gates stumped for the $8.5 billion Skype purchase and international domination may be a good reason for the enthusiasm. Microsoft, Nokia and Skype could be deadly to data roaming charges.

In a BBC interview, Gates said he advocated for the Skype acquisition. Surprise! Did you expect Gates to say that he hated the Skype purchase and that it was too pricey?

In the BBC chat, Gates said video conferencing will improve. He's alluding to the fact that video phones will be common---you could argue that they are today via tablets and Skype.

Kevin Fox, a Mozilla Labs designer, argued that Microsoft-Skype and Nokia can upend mobile carriers. Google is aiming for something similar.

I agree with Fox, but there are a few other key items to consider about the Microsoft-Skype combination with a broad partnership with Nokia. Here's the landscape:

  • Microsoft's Windows Phone 7 on Nokia phones will still have a tough time getting traction in the U.S.
  • In Europe, however, Microsoft and Nokia could do significant damage in terms of market share gains.
  • Skype is well received abroad and serves as a killer app on a solid mobile OS with good hardware from Microsoft and Nokia, respectively.
  • Europe also happens to be the place where data roaming charges are obscene. ZDNet highlighted the data roaming issue in polls around the world.
  • Take those moving parts and Nokia and Microsoft could take Skype and integrate it to the point where it can minimize carrier connections on the fly. If Skype could instinctively leverage Wi-Fi where ever possible---or cut out wireless carriers entirely---Nokia and Microsoft could do a real service.
  • And those data roaming charges are high enough where even folks that even the Microsoft phobic would play along.

It's unclear whether Microsoft-Skype-Nokia could pull off such a carrier-minimizing stunt, but the math adds up. Users could theoretically save on data roaming. And all Microsoft has to do with Nokia is hold the line on international market share and both companies will be major players.

Related:

Topics: Banking, Wi-Fi, Tablets, Nokia, Networking, Mobility, Microsoft, Laptops, Hardware, Collaboration, Social Enterprise

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35 comments
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  • Double edged sword

    Cutting roaming rates means taking money from the carriers, just when MS et al. need the carriers the most to sell their HW. Getting the carriers' cooperation when at the same time you try to stick it to them is VERY tricky.<br><br>We will see how this one goes.
    Economister
    Reply Vote

    • RE: How Microsoft, Skype, Nokia can rule: Cut out obscene data roaming rates abroad

      @Economister

      Agreed, if MS want to be really disruptive then they should look to spend some of that cash pile on picking up some of the smaller carriers and then start offering contracts on WP7 handsets with unlimited data plans, or at least a data plan which doesn't include Skype usage in its limit.
      OffsideInVancouver
      Reply Vote

      • Now THAT....

        @OffsideInVancouver

        might be interesting to watch. If they bought a "world standard" carrier, even I might consider a WP7 phone. I hear T-Mobile may be for sale. ;-)
        Economister
        Reply Vote

      • RE: How Microsoft, Skype, Nokia can rule: Cut out obscene data roaming rates abroad

        @Economister

        T-Mobile you say?... Just did a quick check, Deutsche Telecom's market cap is just under a quarter that of MS's...

        Go on Ballmer, do something extraordinary, you know you wanna!
        OffsideInVancouver
        Reply Vote

    • However, it wouldn't be sticking it to the carriers

      if those carriers would be getting traffic through their pipes that they otherwise wouldn't have.<br><br>Making a service attractive to people who would otherwise not use the product, would create an increased volume of calls and traffic through the major carriers' pipes/
      adornoe
      Reply Vote

  • RE: How Microsoft, Skype, Nokia can rule: Cut out obscene data roaming rates abroad

    guys rememeber they now have no "big brother" watching over there every single move, i doubt microsoft will buy nokia as the deal is huge considering the price and other factors but they could essentially get carriers into a contract where the user give them a fixed fee or user opt for a premuim skype service with revenue shared between microsoft and carriers and allow users to use skype for unlimited calls over the wi-fi or even on data. "3 mobile" in UK allows unlimited free skype calling..with microsoft and nokia pushing they can get into exculsive deals and the game can turn around pretty rapidly.. esplly in the enterprise market
    abhi.jamwal
    Reply Vote

    • But if that does not pan out.....

      @abhi.jamwal

      what is plan B?
      Economister
      Reply Vote

    • RE: How Microsoft, Skype, Nokia can rule: Cut out obscene data roaming rates abroad

      It's the best time to make some plans for the future and it's time to be happy. I have read this post and if I could I want to suggest you few interesting things or advice. Maybe you can write next articles referring to this article. I want to read even more things about it! <a href="http://apartmentsforrentinbarcelona.org/">apartments for rent in barcelona</a>
      tringo007
      Reply Vote

  • Cost is shifted onto the Consumer

    What will stop obscene roaming rates is allowing carriers (the smaller ones) to piggy back on ATT/Verizon infrastructure at a non-obscene rate.

    The cost otherwise gets passed along to the consumer.
    Dietrich T. Schmitz, ~-~ Your Linux Advocate
    Reply Vote

    • RE: How Microsoft, Skype, Nokia can rule: Cut out obscene data roaming rates abroad

      @Dietrich T. Schmitz, ~-~ Your Linux Advocate
      Do AT&T and Verizon have a large European presence?
      x I'm tc
      Reply Vote

      • tiny USA

        @jdakula I think you guys should realize that the US mobile market is very small compared to that of asia and I would even guess Europe (but could be wrong there). Look at the bigger picture to see the problem as the US structure is really antiquated, if not dictatorial! Check out the China carriers and their market for some leadership in what the US should do (I know, it hurts but in the interest in better service for the customer...)
        Bradish@...
        Reply Vote

  • The Power to influence the industry

    The interesting aspect of MS, Skype and Nokia is the developing potential to influence the market at the carrier level.

    At the same time I see Skype currently being a force in the market. My family has been using it for almost 5 years for video conferencing around the world.

    Risks I see are MS pushing to exclude competitive products, be it new products from HP using their Palm technology, Google's Android, Apple's two OS platforms or Linux users.

    Oddly enough it MS decides to pull, or seriously deteriorate, Skype performance on competitive platforms it might well provide an opportunity for a competitive product to push Skype out of it's prime position in the market.
    Ken_z
    Reply Vote

    • A conspiracy theory of mine...

      @Ken_z

      argues that MS could slowly kill Skype as a favor to the carriers in exchange for them pushing WP7. The downside would be as you mention, that newer and better alternatives would probably come along, but it just might give MS and WP7 traction long enough to become a contender in the market.
      Economister
      Reply Vote

      • RE: How Microsoft, Skype, Nokia can rule: Cut out obscene data roaming rates abroad

        @Economister
        My guess is that MS looked and said, "We already run one of the biggest and most profitable peer-to-peer networks in the world, Skype can easily fit right in."

        MS doesn't care if you use WP7 or not, they just want to get you into their cloud (as opposed to Google's). Right now, they are in a great position to do that relative to the aforementioned competitor.

        If they integrate Skype with SkyDrive and Hotmail and Office Web Apps, etc., it won't matter to them if you access those services on an Android, Blackberry, or i phone. Lockin in the cloud is going to make lockin on Windows look like unabashed freedom.

        Skype is just one more way to get you there.

        That said, count me in. The MS future strikes me as a bit more appealing than the Google one. (I'd rather say nuts to both of them, but I don't think that's an option.)
        x I'm tc
        Reply Vote

      • You obviously dont know much about Nokia

        @Economister <br>You obviously dont know much about NOkia, they will already do that and they wont just become a contender they will take the No1 spot or No2. Nokia is massive everywhere apart from the US
        saf312
        Reply Vote

      • Obviously you don't know much about inflection points

        @saf312<br><br>A LOT of things can go wrong with the MS-Nokia deal. The past may be almost irrelevant in predicting the future. Let's see how Nokia's market share holds up first and the quality and market acceptance of their first WP7 sets, before we get too excited about predicting the future. Giants have stumbled and fallen before.
        Economister
        Reply Vote

  • WOW

    I thought Bill Gates would actually stand up to Ballmer and fire him... any way you look at this, it was all Google tricking Ballmer to spend that much money... and it worked..
    Hasam1991
    Reply Vote

  • The mobile operators might actually welcome this

    The European mobile operators have made no secret of their dislike of Apple and especially Google. A primary reason is that they view Apple and Google as selling products designed to push their own high-bandwidth services, which put enormous pressure on the mobile network infrastructure, without giving anything substantial to the operators.<br><br>Upgrading the mobile network infrastructure to support higher data rates isn't cheap, and if increases are eaten up by iPhone and Android users, that leaves the operators less able to provide the mobile internet services some have been heavily promoting (both prepaid and subscription).<br><br>The obvious reason for charging obscene data rates for roaming users is to discourage them from using the data networks. Why pay these obscene charges when you can pop into a discount supermarket and buy a prepaid Sim card with a few GB of data? It's still metered, but at a reasonable rate, and then everything goes through the local mobile operator.<br><br>In the longer run, I think the mobile operators aim to become primary providers of internet data services. That's difficult to do if iPhone/Android users eat up any new bandwidth they add. In contrast, if Nokia/Windows Phone users are still paying monthly tariffs, but are sending much of their traffic over other networks (e.g. corporate/institutional or home WiFi), then the operators can offer higher quality services to users paying for mobile internet, without giving up the base revenue streams from mobile phone users.<br><br>Ultimately, given Nokia's excellent reputation with the operators, and Steve Ballmer's claim that he wants to make Windows Phone the most operator friendly mobile OS, I don't think Microsoft would do anything that would anger the operators. Taking some of the load off of their networks could actually be what the operators want right now.
    WilErz
    Reply Vote

  • Interesting analysis

    As an American, it is sometimes easy to forget European and Asian markets. Each acquisiition, by itself, was just one part of a much bigger puzzle. Nokia + European market dynamics + Microsoft + Skype = A shift in market dynamics. A picture is already starting to form. I wonder if there are any more missing pieces from the puzzle.
    Your Non Advocate
    Reply Vote

    • RE: How Microsoft, Skype, Nokia can rule: Cut out obscene data roaming rates abroad

      @facebook@...
      You're missing Azure, Windows Live, Office 365 and a few other pieces. There does indeed appear to be a bigger picture forming.
      Nunya Bidnez
      Reply Vote
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