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April 25, 2009


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Andy Abramson


Skype's addressable audience size + an all digital backbone (3 was the first to embrace 3G and IP)

A need to differentiate itself from Vodafone and Orange in the UK, plus more established carriers who are not Skype friendly where they compete.

Proven uptake in the UK with Skype and sales of SkypePhones.

New Skype application (from Skype) works on more handsets (i.e. Nokia, Samsung, etc.) means chance to convert.

High pre-paid market existing in UK with both banked and unbanked consumer audience means better chance to convert users to 3.

PrePaid means lots of money in the bank that never gets converted (breakage)

This is a true differentiation strategy and very workable.


So I am missing what is in it for 3 in this service. As I understand it, with an unlocked phone and a one-time SIM, I get unlimited airtime when calling other Skype users. It really looks like it is a loss leader in the hope that they will subscribe to voice/data plan. It is not a strategic plan and I am puzzled as to why all three of you suggest otherwise.

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