O2 trials internet calling to take on Skype

Telefónica’s O2 is taking on Skype and Google voice with the trial of a new service that allows users to make calls over the internet.

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The service, dubbed O2 Connect, is the first launch from Telefónica Digital, the division created in September to lead the company’s digital growth strategy and invest in new product development.

Telefónica Europe hopes the service will attract new customers and increase satisfaction with the brand for existing ones.

O2 currently has the largest share of the UK mobile operator market and commands a 27.1% share, according to comScore. Its closest competitor is Vodafone, with a 20.2% share.

O2 Connect will allow iOS and Android smartphone owners to use voice and text services over WiFi networks from their existing mobile number to any UK mobile or landline.

Some parts of O2 Connect will be included within existing tariffs, while others will be sold as extras to non-customers. It is also likely that O2 Connect to O2 Connect calls could be made unlimited, similar to the Skype and Google Voice offerings.

The trial commences this month by invitation only to UK O2 consumer and business customers. O2 Connect is expected to launch as a commercial service in 2012.

O2 Labs, which is now part of Telefónica Digital and developed O2 Connect, has also previously released an app called Social Call that allows customers to ring their Facebook friends from their mobiles. The service is similar to T-Mobile’s Bobsled in the US.

Skype is currently the leading internet telephony service in terms of users and is in the process of being acquired by Microsoft.

UK mobile operators by market share (Source comScore October 2011)

O2 27.1%
Vodafone 20.2%
Orange 19.7%
T-Mobile 10.5%
Virgin Mobile 7.3%
Three 6.9%
Tesco 5.3%

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