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5/17/2006
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Telecommunications Free For All

Skype gave new meaning to the term Free For All this week, announcing that North American customers can make free SkypeOut calls to non-Skype phones.  The cost for calls from North America to other destinations varies, but can be as inexpensive as $0.021 per minute to Austria, Germany, and the United Kingdom (for landline phones; calls to mobile phones cost more).

Skype to Skype calls were always free but the addition of free SkypeOut calls in North America dramatically changes the telecommunications landscape in many respects.  More and more local phone companies are offering bundled plans with unlimited long distance for home users, which effectively is the same thing as free long distance once your usage is past the threshold.  Last week, the Wall Street Journal reported that several mobile operators that introduced high-speed broadband services with unlimited usage pricing, are enforcing policies that prohibit applications with high-bandwidth activities, including voice-over-IP calling.  

Verizon Wireless specifically bans applications that consume large amounts of bandwidth, citing Webcam broadcasts and automatic data feeds, among other things.  Internet calling could definitely increase wireless broadband usage so customers using metered plans need to be especially careful.

Free SkypeOut calling - used over wireless broadband - would serve to siphon calling from the mobile operator's voice network to their data network.  Mobile phone networks, which transmit signals over radio waves, inherently have far less capacity than land-line networks.  Internet applications that consume lots of capacity, such as movie downloads, are taking their toll on all Internet service providers, but wireless carriers face an even greater challenge.Skype relaunched its service in the U.S. last November, and according to a company spokesperson, is introducing free calling to get more Skype users signed up.  Right now, in the United States, there are ca. 6 million users, out of 100 million worldwide.  30% of all users are business users.

I've been using Skype off and on since early 2005.  The transmission quality of the calls has increased greatly.  In fact, at this point, I would say that calls I make on both Skype and SkypeOut are indiscernible from calls made via the PSTN.

What does this mean for other telecommunications carriers?  For starters, it's hard to beat a $0 long distance bill.  For calls that aren't free, such as international dialing, the rates are extremely favorable.  And for those odd situations, such as travel onboard an aircraft with Connexion by Boeing inflight broadband service, free calls from 11,000 m is pretty good too.

But this also portends a dramatic change in how long distance calls are charged and what "long distance" is perceived to be.  Skype itself has - for a select few - replaced the traditional office phone system - and made it possible for users to be anywhere in the world (with Net access) and still be connected.

Siemens just introduced the HiPath BizIP platform.  The new offering is a peer-to-peer technology that supports Voice-over-IP (VoIP) communications for organizations with up to 16 phones.  Communication with the PSTN and broadband data networks is handled by the BizIP Access Device and the HiPath BizIP interoperates with low-cost session initiation protocol (SIP) services offered by operators.  Popular Telephony, a smaller vendor in the space, offers PeerioBiz, a low-cost peer-to-peer platform.

So what does all this mean?  My initial take: pretty soon we'll be calling for free on serverless (i.e. peer-to-peer) phones.  We just won't making them using Verizon Wireless' broadband.

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