o2 to offer free mobile calls via internet

WE SHOULDN'T BE surprised, but the internet seems finally to have done for one of the most solid business models of the past 25 years; paying for calls made on mobile phones. Telefonica’s announcement that its o2 brand will be the first mobile operator to offer free web calls is sure to see rivals follow suit as they struggle to adapt to the threats of the likes of Skype and Google Voice. The development does beg two important questions, however. First, how will they make their money and second, does sponsorship still make sense to its new model. In answer to the first question the company claims they are “not expecting the service to erode voice call revenues” but Telefonica is lining up a range of premium services including mobile payments, entertainment, gaming and of course, content. This would suggest the move will be good news for sports sponsorship with deals to acquire exclusive video footage key to making the strategy a success. In a week which also saw sports property tie ups with other mobile operators Etisalat and Du, this suggests that sport has moved closer to the heart of o2’s business model which won’t be bad news for media rights values either.