New York Times has run a story on Skype‘s acquisition and

how would it be disruptive for the traditional cellular carriers.

A lot has been written skype’s acquistion (please see the related links below). Some people feel that it’s going to be good for the enterprise market, some feel that it is a useless deal with Microsoft bleeding millions of dollars everyday and a questionable “internet policy”. Perhaps all these rationales look at the whole question piecemeal. But no one has the complete answer.

I have been interested in the VoIP market for long. I have written about it earlier extensively (here, here, here) in the past. Yet, Skype’s acquisition takes the cake.

In an earlier post, I mentioned:

TRAI called for implementation of Internet Telephony and Carrier Access Codes.

This was mandated much earlier way back in 2001; however, this was opposed by Bharti. Reliance had entered with the premise of “death of distance” and had made STD calls ridiculously cheap….. If Internet telephony is implemented in it’s present shape, it would

see present rates crashing down to a large extent.

Image via Wikipedia

It would give a new lease of life to ISP’s like Sify and other fringe lunatics to scale up investments. I can foresee the entry of players like Skype as well as other SIP players which rely on open standards. It’s hard not to imagine the real gains to economy as a whole and it would benefit the adoption of setting up of WiFi hotspots on a larger scale.

In another blog post, I had written:

Govind says that Wifi can be used to carry calls which works out to be cheaper. Of course, I have explored these options way back earlier on; the current “competitive” scenario has resulted only in oligopolies and each new talk plan is basically a rehash of the others. Without disclosing upfront about the estimated monthly outgo, TRAI okays each plan without taking the consumer’s advantage in question. As a result we are fleeced to no extent. I really doubt whether WiFi can be used to carry out the calls-the investments are way too huge to justify parallel (and cheaper ) networks. Where would Bharti get it’s crores from?

Assuming that wifi becomes available all around, what is the guarantee that telcos won’t use all means to block the calls via Skype or any other internet phone? High usage charges would spike any consumer interest because in all probability it would be a “value added service” which by it’s own argument, can be priced higher. Unless of course, people set up their own small WiFi networks. A long shot indeed.

And in the winning entry for “Big Ideas Contest”, Skype (or Internet Telephony) was mentioned in passing; actually leveraging the low cost of routing international calls and passing on the advantage to the customers.

Teleconferencing would make it easier for people to people contacts; Gujarat has shown the way! Why can’t India have something similar to Skype? (There is a move to have something similar in the GNU world where encryption would be based on open standards).

I don’t have any love lost for Microsoft; but as any corporation, it does what it has to do to survive. It’s a jungle out there and only the best survive by breaking through the clutter. There can be no easy answers to certain “defining moments”; we must wait for the answers to reveal themselves. The point here is that I have remained consistent in my assertions over the years and have called for opening up the standards instead.

Let’s look at what New York Times article has to say.

 

The telecommunications industry is already in a state of flux as more people disconnect their home telephone lines in favor of cellphones. Now the wireless carriers are looking for new ways to make money based on mobile broadband and applications, rather than voice minutes. “Eventually, everything migrates to a data channel,” said Brian Higgins, an executive at Verizon Wireless who is developing products and services for the company’s high-speed 4G network. “We’re moving away from silos of communication to one where everything is combined together.”

This assertion is not valid but rather a corporate spin and gibberish. The reason is that landlines offer higher rate of data transfer and wireless networks can easily get choked. Similarly for 3G networks being pandered about in India; main reason is to offer better voice minutes than spur on the data usage. Had there been any commitment for the same, the market would have reacted in a “bloodbath” to drop the rates and make it better to access the services.

Howsoever clueless these people are, data is definitely not on their minds. Hence, the question of “communication silos” does not arise at all.

But the Skype deal also signifies a larger interest in next-generation communications services. It is not just Skype that the wireless companies need to worry about. A bevy of mobile messaging applications, including WhatsApp, Kik, GroupMe and textPlus, allow people to send messages over data networks, sidestepping the cost of sending and receiving standard text messages.

Carriers already must deal with many new competitors in the communications game. Name companies like Apple, Facebook and Google are making services available that traditionally only carriers could offer. Google, like Skype, offers ways to make free phone and video calls over the Internet. Apple lets iPhone owners make video calls.

The ultimate risk for the carriers, analysts say, is becoming “dumb pipes,” providing only the data connection and not selling any more sophisticated communications services themselves.

Agreed on this count. The newer generation services mentioned here are really disruptive. However, they have not achieved a critical scale; not to the level that carriers start blocking them actively violating “net-neutrality”.

So how would the companies react to such developments? Possibly by lowering expectations of supra-massive profits at our expense and by “signing up deals”. Although Value Added Services (VAS) remains a viable channel, I still have to see any “developments” in that; it remains a subject of a future post.

Carriers have responded to the shift toward digital communication differently. Some seek to leverage the new wave of services to differentiate themselves and gain an edge over competitors. Sprint, for example, recently united with Google to let its customers link their Sprint phone numbers to Google Voice, a service that rings all of a person’s phones and even Gmail when someone calls that person’s number.

However, these efforts are half hearted approaches to the present dispensation. Skype is important, yes, in the VOIP Space. With the development of GNU Public Telephony project on fast track, I am sure something would definitely strike in for alternative access opportunities like SIP phones coming in the mainstream.

I remain positive for a Vonage like service over landlines and I strongly back that company (please, it’s not an endorsement). For a fixed amount, it’s possible to call in major countries and is totally “place agnostic”. I can make unlimited international calls all across for a fixed monthly fees. Thats the real power of broadband for communication. Wireless is not cool because of it’s inherent limitations and POTS (Plain Old Telephone System) is STILL the best bet.

Related articles

• What Will Be The Skype Effect On Telco’s? (viralblog.com)
• Microsoft and Skype: Steve Ballmer as George Steinbrenner (smartblogs.com)
• Why Microsoft’s Buyout of Skype Changes the Mobile Game (atomicpoet.wordpress.com)
• Microsoft’s Skype Deal Offers Huge Benefits, Risks (microsoft-watch.com)
• Microsoft to acquire Skype, Windows Phone integration incoming (dialtosave.co.uk)
• How the Skype Deal Can Pay Off for Microsoft (datacenterknowledge.com)
• Microsoft Acquires Skype- $8.5 Billion (ramanan50.wordpress.com)
• Microsoft Buys Skype for $8.5 Billion. Why, Exactly? (wired.com)
• VoIP Provider EUC Services Launches JiffyCall, an Online Pinless Dialing Service for Cheap International VoIP Calling (prweb.com)
• Microsoft’s Skype Deal Means Monetizing (microsoft-watch.com)
• Microsoft Unlikely to Boost Rates on Skype’s Premium Service (dailyfinance.com)
• Guide To Installing Skype On Fedora (brighthub.com)
• Skype: from start-up to $8.5bn sale (guardian.co.uk)
• Microsoft buys Skype for $8.5bn in its biggest purchase and gamble yet (guardian.co.uk)
• How One Swedish Startup Was Almost Acquired By Skype, Pre-Microsoft Deal (techcrunch.com)
• UAE’s du to offer VoIP this year; Skype still banned/blocked (skypejournal.com)