Skype has become the world's single largest provider of international calls, surpassing even incumbent telcos like AT&T. Unfortunately for the company, few of these calls generate any revenue, and corporate parent eBay grows impatient.
Skype might not be performing quite as well as parent company eBay would prefer a $2.6 billion acquisition to perform, but that hasn't dampened worldwide enthusiasm for the VoIP service. Skype is so popular, in fact, that new numbers out from TeleGeography suggest that it has become the "largest provider of cross-border voice communications in the world." Take that, AT&T!
Actually, AT&T probably doesn't care, since long distance has lost some of its revenue-generating luster, but the surging popularity of VoIP no doubt keeps future-thinking execs up at nights. Skype's revenues are more modest than the big telcos, despite its usage numbers; at eBay's annual meeting earlier this month, the company said that Skype pulled in $550 million in 2008.
Most of Skype's usage, though, generates no revenue. Its free computer-to-computer calls (certain handsets and mobile devices can now be used as well) have become a hugely popular way of making international calls. TeleGeography estimates that Skype's international traffic jumped by 41 percent in 2008 and topped 33 billion minutes of use, most of that in free calls. Traditional international calls grew only 12 percent in 2008.
Skype also hopes to work its mojo in the business world, offering a new beta of "Skype for SIP" that allows corporations to route calls from a PBX system over the Internet. As with the consumer version of the software, calls that remain on the Internet and go to other Skype users would be free; calls that connect to the traditional phone network cost pennies a minute.
Growth brings new challenges, of course, and as Skype now handles more international voice conversations than any incumbent telco in the world, governments are beginning to get interested. One of their chief concerns is that mobsters, spies, terrorists, Ponzi schemers, and other assorted bad guys don't simply get a free pass on eavesdropping by using a VoIP service like Skype. In the US, CALEA rules have tried to bring wiretapping rules into the Internet age.
European authorities also announced last month that they would lead an international effort to "overcome the technical and judicial obstacles to the interception of internet telephony systems." Skype was singled out for particular attention, though the company told us that "we have capabilities and we have programs in place and [governments are] aware of them."
Skype's prominence has also put it in conflict with existing phone companies, especially mobile operators. Skype would love nothing better than to see its software running on every handset in the world; plenty of consumers feel the same way. But wireless operators like to lock down their handsets to prevent exactly this sort of behavior, so Skype has been a key proponent of "wireless net neutrality," which the FCC declined to act on last year.
And it continues to face internal pressures from eBay, which early last year was publicly talking about its willingness to sell Skype if "synergies" between the two companies failed to materialize.
Still, what company wouldn't want to have Skype's problems? Going from startup to the world's single largest provider of international calls in six years is impressive; more impressive would be to see Skype generate massive revenues even as the cost of voice communications plummets.
Source: ars technica