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SCMP Reporter

Skype, one of the world's largest voice-over-internet protocol service providers, has implemented a 39 HK cents connection fee per call for all outgoing international calls.

Skype's move comes as Hong Kong-listed telecommunications company e-Kong Group launches a free mainland-call offer for its software-based ZoiPPE  telephone service to cover the Lunar New Year period as a prelude to introducing its service globally.

Skype and its internet-based rivals use software that enables a computer to call another computer for free or to a fixed-line telephone or mobile handset at a relatively cheap tariff compared with other telecommunications operators.

The connection fee has been implemented first for the Skype Out service, which allows users to make calls to mobile and fixed-line numbers.

The new charges for users registered in Hong Kong involve the connection fee for each call on top of a per-minute cost to various destinations.

The  connection fee is part of a  strategy to offer 'a simple, convenient and cost-effective way for consumers worldwide to call land lines and mobiles over the internet,' Skype said in an announcement last month.

A user making a Skype Out call to a mainland mobile-telephone user will be charged a per-minute cost of 16.6 HK cents, plus a connection fee of 39 HK cents for each call.

That compares with Hutchison Global Communications' monthly tariff of HK$38 for unlimited calls to the mainland.

'Skype is able to charge users higher prices amid fierce competition in the market because it offers IDD (international direct dialing) services through various platforms like computers, mobile phones and WiFi,' an industry source said.

The source said telecommunications operators such as Skype would like to transfer part of their operating costs to end-users through the new fees.

Telecommunications operators that provide the final connection to fixed-line or mobile users charge Skype and similar companies for using the connections.

Skype declined to indicate the proportion of calls it handles that use fixed-line or mobile links.

'The real reason for Skype implementing connection fees should be to boost revenue,' e-Kong executive director S.G. Lim  said,  acknowledging the opportunity this gave his own company.

'We do want to attract Skype users to try our service.'

The company, whose shares have gained more than 17 per cent this year, will offer  free calls to the mainland from  any location  from Thursday to February 28.

'With over 15 international call traffic suppliers  connected to the route, we should have sufficient bandwidth to handle the surge of traffic during the promotion period,' Mr Lim said.

According to researcher TeleGeography,  total international call traffic is expected to reach 350 billion minutes this year.

'The market is so big that we are able to compete with Skype,' Mr Lim said.

E-Kong aims to win a small slice of the market from traditional telephone operators such as PCCW and China Telecom.

'Skype is a product created by Europeans and it was acquired by US-based online marketplace eBay to make it the world's largest soft-phone operator,' e-Kong chairman Richard Siemens  said. 'We hope ZoiPPE will also become a strong player in the Asian market.'

Mr Siemens, who helped Hutchison Whampoa chairman Li Ka-shing  expand into the telecommunications business in the early 1980s, believes the  technology should assist Hong Kong strengthen its  position among regional telecommunications markets.

'Local operators only compete in the local market by cutting prices aggressively. We do want to keep Hong Kong a telecoms hub in the region through this software,' Mr Siemens said.  The firm had invested US$1 million on building global networks to support the new service, he said.

Shares in e-Kong closed up 6 per cent yesterday at 88  HK cents.  The Hang Seng Index slipped 0.4 per cent.



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Skype

E-Kong looks to benefit as Skype adds fee