11. Get ready for telephony bloodbath

Back to contents of State of the Net issue 1

Fiachra Ó Marcaigh, Director, AMAS

Emerging Trends
Signs are there is about to be a battle – a series of battles – around voice over Internet Protocol (VoIP) phone services. After several years hovering near-mainstream, the VoIP trend has taken off across all sectors, from home users to corporate.

Last September, there was a clear sign that VoIP was turning into big business. That’s when eBay agreed to pay $2.6 billion for Skype, one of the leading VoIP providers world-wide.

The ability to make free computer-to-computer voice calls over the Internet fuelled the initial uptake. When this was extended to allow computer users to call ordinary phones at extremely low rates, it drove demand sharply up.

1.7c per minute

Skype allows Irish subscribers to call land line numbers all over the world for 1.7 cents per minute. This is far below the rates available even on discount for calls to the US and Australia using traditional phone service.

In the US, Skype has just upped the ante even further, offering free calls to landline and mobile phones in the US and Canada until the end of the year. The scene is set for a series of high stakes battles:

1. Vonage, Skype’s biggest rival is planning a flotation. Some analysts say Skype’s move has killed that option for Vonage, which is losing money heavily (€265 million in 2005).

2. Coming up behind Skype are some of the 800-pound gorillas of the online world,  such as AOL. It has just announced a free local phone number service so its instant messenger users can receive calls from traditional phone lines. This is a feature that Skype charges for, as SkypeIn.

Fiachra Ó Marcaigh as a Director of AMAS has led a series of strategy, research, accessibility and usability assignments. A former Assistant Editor (Systems) at The Irish Times, he has six years’ experience of eBusiness consultancy.

Back to contents of State of the Net issue 1