TELECOM Digest OnLine - Sorted: Internet Telephony Grows With Do-it-Yourself Help

Internet Telephony Grows With Do-it-Yourself Help

Lisa Minter (
Fri, 10 Jun 2005 19:36:37 -0500

PluggedIn: Internet telephony grows with do-it-yourself help
By Adam Pasick

After nipping at the heels of the major telephone providers for years,
Internet telephony is finally taking a big bite out of telephone call

Leading the way is a Luxembourg-based startup, Skype, which has signed
up 40 million users for its Internet telephone service and is growing
at a remarkable 150,000 users a day.

It's managed this feat with a tried and true method for Internet
startups -- giving away its service for free.

But like its predecessors, Skype could fall victim of its own hype as
bigger, better-funded competitors are drawn to the market it
created. It wouldn't be the first time a high-tech pioneer stumbled
after an early success.

For now, Skype's blazing the trail with software that enables free
phone calls to any other Skype user around the globe. All it takes is
a headset or telephone connected to a computer and a broadband
Internet connection,

The free service poses a challenge to Vonage, long the leader in
low-priced Internet telephony using normal telephones plugged directly
into broadband connections. Internet giants Yahoo and Microsoft's MSN
are also rolling out free Internet telephony services that are bundled
with their popular instant messenger programs .

Skype is turning its fast-growing user base into a clear competitive
advantage. A core of do-it-yourself Skype enthusiasts have rushed to
create new capabilities for the service, most of which are also
free. They've built voice mail, text messaging and call recording
capability for the network.

That, in turn, has spurred creation of a range of add-ons, from video
conferencing to foreign language tutorials.

The thriving Skype developer community gives the company an edge as it
girds itself for competition from Microsoft and Yahoo, which Skype
Chief Executive Niklas Zennstrom has called "the biggest threats" to
Skype. It's similar to the third-party software applications gave
Palm's handheld devices an early lead in the PDA market in the 1990s.

Other Skype add-ons include programs that let users record their
telephone conversations ( ), send and
receive voicemail messages, collaborate with coworkers
( ) and send text messages to mobile
phones ( ).

One of the newest Skype add-ons combines the service with the emerging
format of the podcast, a home-spun radio show distributed over the
Internet, in what has come to be called a Skypecast.


For enthusiastic users like Rob Walker, who lives in England and
remotely manages a small Latin American market research business using
Skype, any additional capabilities will be more than welcome.

"We're communicating between Mexico, Argentina, Chile and Brazil, and
we're looking into using video conferencing, which would be quite
useful," he said.

Walker said his business already makes significant savings from using
Skype's free calls: Even discount phone carriers commonly charge rates
of 30 pence per minute between Britain and Latin America, and Walker
spends hours each day talking to his employees.

"As a small business, why wouldn't we use it?" he said.


Skype's business plan has been to offer its basic service for free and
then charge for additional services. But Zennstrom said the company
has intentionally given developers free reign, even if their offerings
compete with Skype's own offerings.

The privately-held company made a crucial decision early on to open
its API -- a set of protocols and routines that coders use to build
new software applications -- which allowed developers to write their
own applications that fit neatly together with Skype.

The move involved surrendering a certain amount of control over how
Skype is used. Indeed, some of the add-ons, such as "answering
machine" software and a video conferencing application called
Video4Skype ( ), bump up against some of
the products that Skype itself plans to offer.

"We want to be as open as we can. It's about creating an ecosystem
around Skype," he told Reuters in an interview. "We have no problem
with those things -- the more the merrier. Even if there's no direct
monetary benefit to us, we believe this is helping us."

The Skype add-ons extend to hardware as well, including a device from
Siemens that links the service with cordless phones, and a hobbyist
project to hook up Skype to a salvaged pay phone.

Phillip Torrone, a technology writer for Make magazine and Popular Science,
has posted a video link showing off his Skype payphone creation on the Make
Web site ( ).

"Skype payphone is moving along, right now you can use it to make
receive any Skype call," he said in an email to Reuters. "It's become
my full time phone here at home since it looks so cool."

Copyright 2005 Reuters Limited.

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