Should mobile operators be disrupting themselves? At first glance, that appears to be what Telefonica O2 is doing by launching a service in Germany that uses VOIP-style technology to dramatically cut the cost of international calls.

The service, dubbed O2 Global Friends, uses Jajah’s IP platform. A caller connects to the platform by dialling a local number. Jajah then routes the call to the target international destination, after converting the audio into packets so the long distance leg can be completed cheaply using an IP network, rather than a dedicated circuit-switched line. (Telefonica acquired Jajah, a Silicon Valley-based start-up, in January for 207 million US dollars.)

All very slick, but isn’t the Global Friends service going to slash the revenues O2 Germany earns from international calls? Ori Soen, Jajah’s marketing director, is confident that won’t happen. He says the service is designed to appeal to the large number of consumers already using calling cards to cut the cost of their international calls, rather than business users. O2 Germany customers can choose five friends who are abroad and O2 Global Friends will give them a local number for each of them. Soen notes that a business user would typically have a much broader set of international contacts.

O2 plans to roll out a similar service elsewhere in Europe and says its Jajah-based offerings will be backed by a “major mainstream marketing and advertising campaign”. So, it must be pretty sure that pushing IP communications will boost its revenues, presumably by helping it win more customers.

But there has to be a danger that some business users will adopt the Global Friends service to make regular calls to a boss or colleague in another country. Here in the U.K., an O2 market, I registered for Jajah’s existing service, paid 10 pounds by debit card and used the company’s straightforward web site to get a local number for a business contact in Sweden. When I called the local number on my mobile, an automated American voice said “Jajah is connecting your call now” and then I was put through to Sweden. The audio quality was respectable and the call, to a Swedish mobile, cost me a reasonable 27 pence a minute. My mobile operator charges 70 pence a minute for a call to Sweden.

Keeping cost-conscious customers

Even if it does lose international calling revenues, Telefonica O2 still appears to have made the right move by launching Global Friends. As well as competing with calling cards, the service may be enough to deter the cost-conscious from using Skype over WiFi to make international calls, while maintaining customers’ goodwill and at least earning some revenues from international calls. Soen says the O2 Global Friends service is proving “extremely successful” in Germany.

As well as giving Telefonica O2 an IP-communications platform it can use to quickly rollout innovative and flexible new services, Soen believes the Madrid-based telco is reaping many other benefits from its acquisition of Jajah. He says Jajah has also brought the “Silicon Valley mentality – looking at things in very different ways and doing things quickly.”

Jajah, which has its own board reporting into the CEO of Telefonica Europe Matthew Key, is being run at arm’s length, according to Soen. He says in markets where Telefonica O2 isn’t active, Jajah continues to promote its own-branded service, as well as providing white-label solutions to existing telcos. Maintaining that kind of autonomy is going to be crucial if Telefonica is going to retain the entrepreneurs and engineers that built Jajah and its platform.

In the many European and Latin American countries in which Telefonica O2 operates, Jajah’s platform will enable the Spain-based telco to move fast and put the competition on the defensive, according to Soen. “You will see a whole lot of that in 2011,” he says.

By next year we should indeed be able to tell whether Jajah is giving Telefonica a competitive edge. In any case, the shift to IP-based communications is inevitable and, for a company the size of Telefonica, spending 200 million dollars to acquire a proven platform looks like money well spent. But I suspect the Madrid-based telco will have to work pretty hard to also hold on to all of Jajah’s executives and their Silicon Valley mentality.