Skype vs. Every Other VoIP Provider

Technology questions are inevitably lobbed my way when I attend family get-togethers, and the holiday that just passed was no exception. It seems that a couple of folks were seriously considering signing up for some kind of VoIP service (one pointedly remarked on the near-flood of promotional material he was receiving about the service from his cable company), when someone piped in, "What's this Skype thing I keep hearing about?"

All VoIP services allow you to make and receive voice calls via your broadband Internet connection, but there are important differences between Skype and other VoIP services. Here we'll compare them in some key areas so you'll have the information you need before deciding to try one or the other. The exact features and capabilities you get with VoIP service depend on the provider, but for purposes of this discussion we'll broadly divide VoIP services into Skype and non-Skype (the kind you obtain from cable and phone companies, plus third-party providers like Vonage).

Getting Started and Equipment
The process for signing up for VoIP service varies by provider, but it usually takes at least a few days to get service activated. If you want to use an existing phone number with a new VoIP service, the process can be lengthier, often taking several weeks. When starting service, most providers will ship you a device that either connects to or takes the place of your broadband router. To this device, you can in turn connect any existing corded or cordless phones you have. (When getting service through a phone or cable company, you may also have the option of using your wall phone jacks.)

Getting up and running with Skype should take all of 15 minutes—about as long as it takes to download and install the software (available for Windows, Mac and Linux) and set up a free account. Normally, you place and receive Skype calls using your computer's microphone and speakers; if you don't want to be bound by this limitation, there are a number of Skype-enabled phones you can buy that work independent of a PC, including Wi-Fi phones and dual-mode phones that work with both Skype and conventional landlines. There is a device available that will let you use conventional phones with Skype, but it connects to so your PC must be left on in order to use it.

Cost and Commitments
VoIP providers typically charge a flat rate for unlimited calls—at least within the U.S. and Canada—that's considerably less expensive than what you would pay for conventional phone service. Usually, the monthly cost for VoIP service is between $25 and $40, and you will often—though not always—be required to commit to a full year of service, especially if you want to pay the lowest possible price.

Skype uses a different pricing model that for most people will be extremely inexpensive. Skype lets you place unlimited voice calls (or video calls via a Webcam, for that matter) to other Skype users for free. If you want to use Skype to call actual phone numbers, you can buy blocks of Skype credit in $10 increments to cover per-minute charges, which start at 2.1 cents for the U.S. and Canada. Alternately, you can pay a flat $3 a month for a Skype Pro account that offers unlimited U.S. and Canada calls. To receive conventional phone calls on your Skype account, you can obtain a phone number for either $60 or $24 a year—the latter only for Skype Pro users.

Unlike most other VoIP providers, Skype does not let you transfer your existing number, but you can cancel Skype Pro service whenever you want.

Call Quality/Reliability
The quality of any VoIP service depends a great deal on your Internet connection. The faster your connection—both upstream and downstream, since voice calls make equal use of both sides of the connection—the better your call quality and reliability is likely to be.

VoIP performance is impacted not just by the speed of the connection but how much congestion is on your network, as well as the network of your ISP. A potential benefit to getting VoIP from the same company that provides your broadband connection is that they may prioritize voice traffic on their own networks, which can improve call quality and reliability. With service from connection-independent providers (like Skype or Vonage) you can usually use router settings at least to prioritize voice traffic on your own network.

No matter who the provider is, VoIP is still a relatively new technology—at least, relative to the century-old phone system. Therefore, while you can usually count on it, it won't be as reliable as an old-fashioned landline. Remember that if your Internet connection is down, so is your VoIP service.

One other thing to be aware off: VoIP service may or may not allow you to make 911 calls. For example, Skype doesn't support such calls, so you should never rely on Skype as your only phone. With VoIP from a cable or phone company, you usually do get this capability, but not always, so check to be sure.

The Bottom Line
While Skype uses similar technology to other VoIP services, as you can see it doesn't provide all the same capabilities (e.g., you can't use standard phones and you can't transfer your existing number). But Skype provides an easy, inexpensive, and flexible way to get your feet wet with VoIP, and for some it may be all the VoIP you ever need.




Wi-fiplanet.com

Skype Launches On PSP In Europe

30 January 2008

Officials from Sony Computer Entertainment Europe (SCEE) have announced that the new system software update for the PSP will immediately enable all owners of the newer PSP Slim & Lite model to make and receive calls using VOIP (voice over Internet protocol) telephone service Skype.

Available today, the update to firmware version 3.90 only allows Skype functionality on the new PSP Slim & Lite version of the console and not the older PSP 1000 series of consoles. The Skype software allows users to make free telephone calls over the Internet to other Skype users or make paid for calls to traditional landline and mobile phones. Originally announced in January, the Skype service was due to launch in Japan first but was postponed after two microphone products bundled with the software failed to pass Skype’s certification process. Although a headset and remote control is needed no hardware bundle has yet to be announced for the West.
Also added via the 3.90 software update is the Go!Messenger icon on the PSP cross media bar (XMB).

Compatible with all versions of the console, the software will allow for both video and voice chat at the end of February. Currently though, the icon only directs users to a website with further information on the service.

The Skype-Based Call Center: Applications and Examples

Basing a call center on Skype technology opens the door to lower cost and enhanced functionality — but not without trade-offs.

John Edwards on December 12, 2007

With its rock-bottom pricing and extensive feature set, VoIP-powered Skype enables just about any business to deploy an enterprise-class call center on a shoestring budget.

For as little as $10 per agent, per month, vendors such as OnState, PrettyMay Team and SKY-click provide Skype-driven call-center solutions that support virtually every type of call-center function and activity, including voice mail, auto attendant, IVR (Interactive Voice Response), call routing and call recording.
Applications

For outbound call centers, Skype technology allows calls to be made worldwide at rates that would have seemed impossible just a few years ago: as little as 2 cents per minute between continents, and nearly always at rates far below those charged by conventional telcos.

While inbound call centers don't have to worry about the cost of outgoing calls, these facilities can take advantage of Skype to cut infrastructure costs. A Skype-based call center doesn't require various types of call-routing technologies or telco-oriented hardware, and existing data networks can often be used. The software itself also tends to be relatively inexpensive. PrettyMay Team, for example, offers a $150 package that supports as many as 30 lines.

For virtual call centers, Skype technology provides a cheap and efficient method of linking agents spread across cities, states or even continents with callers, call recipients, and call-center supervisors and managers. Record keeping is also simplified, since call originations, destinations, durations, dates, times and other relevant data are automatically recorded. Tech-support centers, meanwhile, can use Skype to send SMS text directly to user devices, as well as provide conventional voice-based support services.

Many businesses need to offer automated information services — such as store locations and hours, travel directions, and storm alerts — to employees or customers. All of the major Skype-based call-center technologies allow businesses to set up automated, prerecorded messages that users can access and listen to at their convenience.

Perhaps the biggest benefit that Skype provides is fast and easy integration with Web sites and internal computer systems, enabling call centers to support services like Web-initiated callbacks and screen pops that instantly present caller information to agents.
Trade-Offs

Despite its multiple benefits, Skype isn't perfect, and businesses thinking about adopting the technology need to be aware of its limitations.

Like other VoIP services, Skype's audio quality is highly variable. Most of the time, voice quality ranges from perfect to acceptable. But sometimes — depending on the condition of the Internet connection between the call center, Skype and the user — the audio may sound jittery, garbled or out of phase. Skype service is also subject to occasional dropouts and spontaneous disconnects.

On the positive side, Skype service is rapidly improving as the company strives to improve its technology — and as ISPs become more experienced at handling high-priority VoIP call traffic. Still, businesses expecting service matching the quality of higher priced, traditional telcos will likely be disappointed.

The other big drawback that Skype-based call centers face is limited scalability. While some Skype call-center vendors promise three-digit-or-higher agent counts, the real-world practical limit is about 20 or 30 agents. Larger deployments tend to exceed the limitations of current Web-based voice technology, making it necessary to use hardware to direct and manage calls.
The Bottom Line

Skype call-center technology is both inexpensive and mature, but adopters must be willing to accept its limitations.

'Google To Purchase Skype?' Chatter Lights Up The Blogosphere

A Google-Skype partnership would make sense on some levels because the companies have teamed up on some major issues.

Google and Skype, together at last? At least on some blog posts they are.

The rumor that Google might acquire Skype was started Monday in a blog on the U.K.'s respected Guardian and since then, the report has taken on a life of its own at investment firms.

Like many Google rumors there is no solid basis for any such speculation (remember the Google phone?). But it persists because there are some logical reasons for the two companies to establish a deeper relationship.

"Currently in favor around London's webbist community is the rumor that Google has been in negotiations to buy Skype," wrote Guardian blogger Jemima Kiss. "Google bases all of its mobile projects in London, so this is the fitting place for such a rumor.


A Google-Skype partnership would make sense on some levels because the companies have teamed up on some major issues. For instance, the two companies partnered with some other firms in making a $21.7 million investment in Fon, a Spanish company that promotes the spread of its Wi-Fi "foneros" -- users who share Wi-Fi access points with each other.

And, the two companies' philosophies are aligned in the upcoming 700 MHz auction; both firms support the "open" measures inherent in the FCC auction.

A Google acquisition of VoIP specialist Skype, a unit of eBay, "makes since on a number of levels, particularly because it fits with Google's ambitions for disrupting the mobile industry through its new open mobile phone development platform Android," blogged Kiss, "And for eBay -- which was recently forced to admit that it had paid too much for Skype."

With several million users on line at any given time, Skype is the largest of a sizable wave of VoIP companies utilizing the Web to send free or inexpensive calls, usually over international borders.

But will a merger or an acquisition involving Skype ever happen? Asked to comment on the rumor, Skype said it doesn't comment on rumors.
Informationweek.com

Do mobile operators fear a Skype out?

If there's one word that is used a lot in the technology world it's 'disruptive'. Every time a new product or service arrives on the scene, the aim is to have a disruptive effect on the marketplace. This means shaking things up and winning market share. And for third-generation mobile operator 3, which currently has less than a 3pc revenue share of the Irish mobile market, the company’s alliance with internet voice telephony player Skype may or may not be the breakthrough it fervently wishes for.

In recent weeks Skype forged a global pact with 3, which is owned by Hong Kong-based conglomerate Hutchison Whampoa, to introduce free voice over internet (VoIP) calls on specially manufactured 3 mobile phones.

For Dutchman Michael van Swaaij, CEO of Skype, it is also a breakthrough of sorts. “A lot of mobile operators have been extremely reluctant to allow Skype near phones because of all the obvious fears.”
The obvious fear van Swaaij is talking about is revenue. Across the world, traditional mobile operators are witnessing declining levels of ARPU (average revenue per user) and are looking for ways to replace falling revenue with new services such as mobile broadband.

Skype was acquired by online auction giant eBay in 2005 for US$2.6bn, which raised a few eyebrows at the time. eBay’s recent third-quarter losses of US$936m stemmed from a massive US$1.4bn write-down it had to take on its acquisition of Skype two years ago.

Skype’s SkypeIn service allows internet users to receive calls on their computers dialled in by regular phone subscribers to a local Skype phone number, while SkypeOut allows users to call traditional phone numbers, including mobiles, for a fixed fee.

While van Swaaij is responsible for Skype’s global business and day-to-day worldwide operations, he is also chief strategy officer for eBay. His job involves defining the strategic direction of eBay and, as CEO of Skype, he reports directly to eBay CEO Meg Whitman.

For 3, which has been active in Ireland for the past three years, the race is on to grow market share and being disruptive is the obvious route. The deal with Skype will see a specially made Skype phone available this year in Ireland, the UK, Australia, Austria, Denmark, Hong Kong, Italy, Macau and Sweden. Skype-to-Skype calls will be free on the 3 Skype phone as long as users are on contract or their pay-as-you-go credit is topped up monthly.

“Skype has been available on mobile before. The big difference is this is the first time a device has been built around Skype rather than as an application on the device. 3 understood where the future is going to be and realised it is affordable handsets and cheap connections. Other operators will be looking closely at this to see what will happen. At Skype we are trying to change the general mindset. Why pay per minute for calls when you can get it for free on the internet?” says van Swaaij.

He also wants to make Skype’s voice and video services ubiquitous across a number of platforms, including television eventually. A good example of the growing spread of Skype is the inking of a deal with Rupert Murdoch’s social networking site MySpace.com to allow users to call and instant message one another using Skype.

Another example is Skype’s move into the SME business world. It has brought out specific SME phone devices and products such as a business control panel that allows firms to buy Skype credit for in-company usage. “A lot of businesses have taken up Skype without our trying to sell it to them. Over time, we will be developing more and more business-oriented services, particularly for SMEs. We currently have more than 10 million people online and they do about six billion call minutes in a quarter. Of course, a lot of those calls are free but it also generates revenues if they use SkypeOut. Across our various business divisions we generated US$98m in the past quarter and we’re growing our revenues at a rate of 100pc year on year.”

Van Swaaij is confident that the deal with 3 will result in a disruption of the mobile telecoms market, but will influence the market rather than rip it apart. O2 Ireland commercial director Gerry McQuaid is not concerned and believes the quality of free internet calls will be a decisive factor. “Until the experience of mobile VoIP calls improves, there is little reason for customers to seek such potential alternatives to familiar switched mobile services, particularly as prices fall in today’s highly competitive mobile phone market. This means that mobile VoIP is still far from being a service with mass appeal.”

John Delaney, principal analyst with telecoms research firm Ovum, says in the short term 3 will use the Skype phone to boost its subscriber numbers. But in the long term if it is successful with the new phone it could also create its own strategic problems. “Imagine the scenario: on your mobile phone you use Skype for phone calls, Hotmail for messaging, Google for search and directions and YouTube for TV and music,” says Delaney. “What do you need your mobile operator for? The answer could turn out to be subsidising phones, carrying data packets and dealing with problems and complaints. Does that add up to an attractive business? The people who will go for the Skype mobile service will be those who want to save money — people who want to call their home country for less, or for free.”

Delaney says the next strategic step may see 3 launch the SkypeOut service to allow users to ring landline and other mobile numbers, but this will require a strategic leap of faith on 3’s part. “If you got SkypeOut on mobile it’s a completely different ball game. Calls won’t be free but the proposition is cheaper calls. This is all new to both parties and they will wait to see how this goes. 3 is not suicidal — it wants to be disruptive and is desperate to win market share but will not do a kamikaze on it,” Delaney concludes.

3’s the charm for internet phone calls

When 3 launches the Skype phone on to the Irish market in the coming weeks, users will be able to make free Skype-to-Skype calls and send instant messages on the move with the push of a button. This is the first time an operator has offered a mass-market device which is tailor-made for free calling over the internet from a mobile.

3 Ireland chief executive Robert Finnegan believes the move will help in the company’s efforts to acquire new customers. According to the most recent figures from ComReg, 3 has less than a 3pc share of the Irish mobile market in revenue terms. “We think it will be fantastic for people with relatives abroad who want to make free Skype calls, whether on a laptop PC or now on a mobile phone,” he says, pointing out that the main caveat is they top up their account with €10 credit every month. “Ireland will be one of the first markets to have the new device and quality will be the same as normal voice quality.”

Finnegan describes 3 Ireland as a mobile data provider rather than a run-of-the-mill mobile operator and while traditional voice providers see revenues per user decline, he is banking on revenues per user rising. “The market is changing rapidly and traditional operators have been creaming the market for years. We know for a fact other operators are concerned; the rate of change in the market is faster than they had anticipated.”

Siliconrepublic

Why Skype and Vonage must die ?

12 October 2007

Skype and Vonage illustrate what is wrong with user communications: They are "closed" and not standards-based. These strategies support business models that are not in line with 21st century wants and needs. They have to go!

I've been a user of Skype and Vonage voice over IP (VoIP) services for a long time. I use Skype to talk with my editor at and to connect with a few friends back in England, while Vonage has reduced my regular phone bills enormously, particularly for international calls. These things are on the plus side.

The minus side? With Vonage, it has been the aggravation factor: It is hard to get good quality, at least over DSL, without resorting to blind experimentation, and using it to support TiVo or a home alarm system is a pain. Even when everything appears to be working with Vonage, you get occasional weird sound-quality problems, and faxing is only moderately satisfactory (incomplete transmissions seem to account for about half of all faxes I send).

Yet again I have to wonder how naive users deal with this. I can't imagine how my wife would begin to figure out what was wrong should I not be here and Vonage stops working. This is yet another example of the huge load of knowledge that the average consumer doesn't have about computer stuff that usually results in minor computer and communications problems becoming insurmountable.

Solving Skype problems is generally much easier because there is no hardware involved, and it works pretty well once you have solved installation problems with firewalls and the like.

But these issues are not what I have a problem with. Nope, my complaint with both services is that they are closed; you can't use products other than those provided by the respective companies, because they don't use standards-based software and the companies refuse to open their systems.

For example, you want to use a softphone with Vonage? The company will charge you $9.99 per month for the privilege of using its SoftPhone software. Even more ridiculous, after your first 500 minutes of use for U.S. and Canada calls, the company will charge you 3.9 cents per minute even though you're not reaching outside of its VoIP network!

But the real du'oh of these services is that to connect a Skype user to a Vonage user or vice versa requires routing via a 19th century concept: the public switched telephone network!

Why does this lack of openness matter? Because both services use a business model that is designed to lock users in and, in the process, limit connectivity and suppress innovation.

The huge user bases of these services are effectively isolated populations, which means that the well-connected user winds up with at least two independent services.

These services and many other commercial VoIP offerings are just a corner of what is an enormous user communications problem. It is like having a car to go to the supermarket, another for going to the movies, another for when you go to visit relatives, another when you go to football games ... you get the idea.

The great opportunity and challenge for vendors is how to integrate these services and give the 21st century market what we want and need: open communications. For the greater good, these closed services will have to either evolve or die.

Computerworld.com

The great Skype hope

04 October 2007

There is a problem with Skype – but it’s not how much money it makes.

Skype is famous enough to have reached the status of a verb, a rare honour. You don’t make a Net phone call, you ‘Skype’, just as you once you didn’t vacuum a floor, you hoovered.

The tiny problem is that, for all its brand success, Skype isn’t yet a giant at all, and certainly not in the league of Google. This might or might not explain why eBay, which coughed up $2.6 billion for the company two years ago, has this week sidelined Skype founder Niklas Zennstrom, and owned up to a degree of disappointment at having to take a $1.4 billion charge on the deal.

Poor eBay, such a lovable company too.

Some think the price was right, but the buyer wrong. Nokia should have bought Skype, not auctioneer of household dross, eBay. eBay thought it would help its core auction business using some hitherto undiscovered level of integration between the two, whereas everyone else knew that eBay is really just a giant junk shop on the Internet and that most people hang Skype phones of their computers to work around the over-priced charges of the BTs of the world.

The two overlap a bit, but the motivation for using one is not the same as the enthusiasm for the other.

But there is a deeper problem with Skype that few of the balance-sheet analysts have picked up on because they don’t spend time worrying about low-life protocols. Skype is welded to a proprietary, non-SIP (Session Initiation Protocol) based way of looking at the world, which turns its service into a sort of walled garden with no way in for outsiders other than the hidden door of its API.

The problems with this approach are unpredictable. Although Skype’s now notorious server crash of August would have brought down any VoIP or IM provider, the proprietary nature of the Skype enterprise looked like another way of hiding the network’s inner core and possible vulnerabilities behind a blanket of secrecy. For companies in particular, thanks to encryption, Skype is hard to see, is radically de-centralised in its workings, hard to block, often hard to manage, and this makes the risk posed by it hard to assess. Skype is a big unknown and that makes some people nervous.

Proprietary designs can be highly successful, but only when others are allowed into the fold to develop to the APIs. Skype has started to address some of these issues, licensing its API to IM control company FaceTime in an attempt to give companies a means of taking Skype’s tendency to go feral with sharp, pointy teeth, but it needs to go further than this.

People don’t download Skype because they want to use a fancy application or love Skype itself; they download it to make phone calls or to conference. Would the company be more successful, less successful, or about as successful had is started with SIP in the first place? It would almost certainly be somewhat less successful because the moribund telecoms companies that fear every new technology would have set out to detect and block it in their traffic. Now that it has won that battle, it faces a sterner challenge, that of increasing subscriber growth among mainstream companies without reinforcing its reputation for oddity and insecurity.

Companies fear what they can’t see and quantify, and companies can’t see or quantify Skype any more than can mystified parent eBay.

Thank : MyVoIPProvider

Skype Shuffle: Is It a Stumble (Upon) or a New Paradigm for eBay?

Changes show that uses of VoIP aren't always obvious.

Owen Linderholm on October 4, 2007

This week's news about eBay and Skype seemed pretty bad at first. Ebay is taking a $1.4 billion charge against its Q3 earnings to pay off Skype's shareholders early as part of its original deal to buy the VoIP upstart. Meanwhile, the remaining founder of Skype is stepping down as CEO. Most press coverage summed the news up as a sign that eBay paid far too much for Skype in the first place and is only now accepting that reality. Very little thought or attention was paid to the underlying questions of what eBay is going to do with Skype.

Some observers seem to even be questioning Skype's long-term viability as a part of eBay. This, despite the fact that there are never fewer than 6 million users online at one time and often more than 9 million — both numbers higher than they were pre-acquisition. For comparison, the current "site that can do no wrong," Facebook, has 40 million "active" users — or 40 million users who log in around once per month. One could assume that would translate into comparable numbers of users online at any one time, so it is hard to see Skype as a failure under eBay. Maybe it just hasn't been enough of a success.

One speculation is that eBay is readying Skype for a rollout as its own independent company or at least tracking stock, but that makes little sense unless eBay really just wants out of the deal altogether. Another common speculation is that there is intense developer activity going on behind the scenes at eBay and Skype, and eventually, some surprising technology will result.

But regardless of the truth behind the rumors, it is very clear that there is some level of disappointment in what has happened with regard to eBay's acquisition. VoIP and Skype boosters expected clever integration into eBay, while others expected a big jump in Skype's user base. But at the time, most financial analysts thought that the acquisition was a strange move at best.

Instead, the usage of Internet calling seems to have leveled off. But from eBay and Skype's point of view, that isn't all bad news, since the growth that there has been has been in the area of paid minutes — in other words, real revenue.

But all of this analysis misses a huge point: the reason for Internet calling's stagnating growth. This has very little to do with the acceptance and usage of VoIP per se and much to do with an overall pause in the usage of all forms of voice communications while the world waits for the other shoe to drop. Actually, the other pair of shoes: the Voice 2.0 shoe and the mobile communications shoe. Jeff Pulver has a straightforward view of one solution, and he thinks that it is way too early to give up.

Right now, most consumers are hesitant to invest in any communications device, because they are waiting for the end of the wired telephone. The mobile communications device isn't quite there yet, and costs are much too high. For all its glitz and glamour, Apple's iPhone is still only a stopgap. People want a phone that costs less than $50 and lets them call anywhere for less than $30 per month, and they know that it is coming.

The more VoIP-savvy consumers also know that VoIP will be part of the solution. For example, Truphone allows you to make a local call with a mobile phone and have a service connect you to any kind of phone anywhere in the world for significantly less than standard rates. And Mobivox even lets you do this with a Skype user — not just a SkypeIn telephone number, but any ordinary Skype user with a name rather than a number.

Consumers also know that the confluence of voice, IM (instant messaging), text messaging, email, Web browsing and video calling is simultaneously enriching and confusing communications. Until one system and one device can handle all forms of communication, there isn't a complete solution. And until all those forms of communication are properly aware of one another and able to interact with applications, the solution isn't complete.

There are services — such as BV Free Conferencing — that let you set up free conference calls, record them and manage them over a Web interface so that you can selectively mute and unmute attendees, for example. Skype itself has the ability to host huge online conference calls known as Skypecasts. There are innumerable services that let you enter two phone numbers and connect the two via VoIP. There are now (finally) cell phone/wifi hybrids that can hand off a call from one type of device to the other as you move between areas. And there is a phone that is really a better Web browser than it is a phone.Slowly, the pieces are all coming together.

And fair is fair. Skype has more features — voice, video, IM, conference calling, online integration, applications and the ability to transfer money over a call — in one place for more people than any other service. So what is missing for eBay? The answer is a subtle one. Ebay has millions of users that need to communicate, but the company is a marketplace, pure and simple. Ebay is all about selling something. It isn't a community, and communication is almost deliberately limited to the mechanics of purchasing.

Enter StumbleUpon. Ebay acquired the social-networking/bookmarking/exploration site less than six months ago. As StumbleUpon is a nascent community (as in small, relatively speaking), better communication tools would be a huge boon to it. Ebay could very easily take StumbleUpon more in the direction of a social network. It is even possible to imagine lots of interesting new applications by putting elements of eBay, StumbleUpon and Skype together. So before we rush to judgment, let's see if eBay stumbles upon a new range of solutions.

eBay Comes to Terms with Skype and Reality

Internet VoIP service's founders leave as auction company takes $1.4 billion charge.

Robert Poe on October 2, 2007

It's easy to ask in hindsight: What was eBay Inc. thinking when it acquired Skype? In September 2005, eBay paid $2.6 billion up front for the Internet VoIP company, with more cash to come if its new purchase met certain performance targets. Did the company think synergy with its auction and online-payment businesses would make the buy worth it? Did eBay really expect to make big bucks from Skype's inbound and outbound calling services? Whatever it expected didn't come true. Skype's founders and eBay have split, more than a year earlier than expected. And both sides are, in different ways, writing off some big money.

Under the deal announced October 1, 2007, the founders would get an earn-out of $530 million. That's one-third of the $1.7 billion they would have made if they had stayed, and Skype's performance had met targets, into mid-2009. One of the founders, Niklas Zennstrom, will change positions, from CEO to nonexecutive chairman. Co-founders Janus Friis and Geoffrey Prentice will resign as corporate officers. For its part, eBay will write off the $530 million. It will also write off $900 million in "goodwill," taking a total charge of $1.4 billion in its Q3 results.

One question the news raises is which side had the idea for the early split. A lot of evidence suggests it was the founders' decision. For example, an eBay spokesman said that Zennstrom could have stayed on to run the company if he had wanted. A post on co-founder Friis's Web site talked about exciting projects ahead. One of those would be his and Zennstrom's Internet TV startup Joost which, probably not by coincidence, went live the day of the eBay announcement.

In addition, eBay had no structure in place to assume operations as soon as the founders left. Michael van Swaaij, eBay's chief strategy officer, is temporary CEO. Henry Gomez, who as president was formerly eBay management's lead representative at Skype, will go back to eBay full time. A search firm will look for a new CEO. So it appears almost as if the founders just decided to up and leave.

Still, it's hard to believe that Skype's founders would find leaving the company early for brighter opportunities more attractive than the $1 billion-plus on the table. More likely is that they were going to miss the performance targets anyway, so they weren't really losing a thing. Indeed, several attempts to make Skype more business-friendly hardly resulted in skyrocketing growth. The founders' early departure would thus solve everyone's problems; they could get on with their more promising projects, and eBay could clean up the financial mess and move forward.

A more interesting question is what eBay's next move will involve. In-Stat analyst David Lemelin thinks that eBay is preparing to sell Skype. The hoped-for synergy is obviously not paying off, and VoIP revenues remain far from overwhelming. Lemelin thinks that's not just because of anything Skype did or failed to do, but because stand-alone VoIP service is itself less promising than it once seemed. The only way that Internet VoIP will prove viable, he believes, is in conjunction with other services.

One such service is mobile communications. Lemelin said that he wouldn’t be surprised if a handset maker like Nokia bought Skype and loaded its client software on all the dual-mode cellular/wifi handsets it made. Other possible buyers are unified and multimedia communications players. Lemelin speculated that MSN.com, AOL LLC and Yahoo! Inc. could all make better use of Skype than eBay could.

Whatever happens, one thing is clear. As Keith Nissen, another In-Stat analyst, put it, "One can say that within Skype and eBay, the realities of the market have sunk in." Equally clear is that those at the top of big companies can be as clueless as anyone else. "With any company that has so much cash, you think they have some grand scheme they're pursuing," noted Nissen, "but they might not."

Eventually, though, reality offers them some clues. In this case, those clues happened to cost $1.4 billion.

How to Ensure The Quality of Internet VoIP ?

Just because it's cheap doesn't mean you can't make sure your service sounds good.

Robert Poe on September 20, 2007

VoIP comes in lots of flavors, but the kind that delivers all your calls over your broadband Internet connection has the worst reputation these days. Providers collapse without warning, and there's no way to guarantee call quality. Still, such services have significant attractions for small businesses, including cost and features. If you decide to go this route, you don't have to accept all the bad along with the good. You can do a lot to help yourself, and you can ask your provider to help you help yourself. Here are some things you can do.

1. Make sure you have the bandwidth you need. One of your first self-help steps should be to make sure that you have the right amount of bandwidth. As the most successful small-business VoIP provider, with some 8,000 customers, Packet8 service provider 8x8 Inc. provides a reasonable basis for comparison. Its bandwidth rule of thumb is that 25 to 30 percent of the workers at a typical company are on the phone at any one time. Give yourself a cushion and assume it'll be 40 percent. 8x8 uses D.729 compression technology to squeeze a voice call into 25 Kbps of bandwidth. That means for a 10-employee business, you'll need 100 Kbps to carry calls alone, on top of all your other data needs. If your provider uses different technology, find out what it is and adjust your estimates accordingly.

2. Make sure you have the right kind of bandwidth. The "A" in "ADSL" stands for "asynchronous." That means that the speeds are different in different directions. That may be OK for home users who download more files than they upload. But if you do more back-and-forth business than Web surfing on your office network, it might sometimes be harder for people to hear you than for you to hear them. 8x8. recommends at least SDSL (synchronous DSL) and perhaps fractional T1 connections.

3. Make sure you're not trying to do too much on your LAN. Companies that send a lot of big files around the office network, like graphic images that hog hundreds of megabytes, won't leave much room for voice traffic. Make sure you have a comfortable bandwidth margin even during periods of peak usage. Either that, or prohibit employees from sending large email attachments whenever the boss is on the phone. You also might consider getting a router that prioritizes voice over data. 8x8 sales and marketing VP Huw Rees said that will set businesses back $200 to $300, rather than the $50 or so for a simpler model. He added, though, that with sufficient bandwidth, and enhanced router may not be necessary.

4. Even with normal traffic levels, make sure your gear is up to the job. Some small businesses, believe it or not, try to make do with residential networking gear. A router that lets your family share the DSL connection at home won't work at the office. You might not mind it when a YouTube video stream interrupts your daughter's GTalk call to her Facebook pal across the country, but your sales superstar whose big closing pitch gets cut off because everyone is logged on to your competitor's Webinar will surely mind it a lot.

5. Intimidate your provider with tough technical questions. Ask your VoIP provider how much packet loss its technology can handle without calls sounding like two robots talking. If it tells you anything more than 1 percent, ask for a discount or go elsewhere. When the provider's gear buffers packets to cope with jitter, how much delay does that introduce? There may be no right answer to that question, but there is also the question of the maximum total delay its service typically experiences. More than 250 to 300, milliseconds and the callers start talking over each other, one of the most irritating aspects of poor call quality.

6. Speaking of delay, ask your provider about its provider. Does it use a name-brand carrier with a network far-flung enough to deliver the voice packets on one hand to a POP (Post Office Protocol) near you, and on the other hand to gateways near the people you're calling, wherever they are? If it does, latency problems should be minimal, because the only uncontrolled part of your packets' journey will be the last mile over the open public Internet from the POP to you. 8x8 says that latency on Level 3's backbone, which it uses exclusively, has become insignificant.

7. Speaking of quality, ask your provider how it tests it. Does it even test for voice quality using MOS (Mean Opinion Score), a standard measure for how people perceive the quality of voice calls? (A score of 4.0 is "toll quality.") If so, does the provider mathematically derive MOS values solely from IP network performance stats? If it does, it might be doing a superb job of delivering voice packets that contain grotesquely distorted sounds. Psytechnics CTO Mike Hollier insists that it's necessary to record actual calls themselves and analyze them to provide meaningful MOS readings. 8x8, for its part, said that it used to do that, but the company eventually found that it understood the correlation between the mathematically derived scores and the quality users perceived well enough that it could cut back on such end-to-end testing.

8. Ask your provider about troubleshooting. If your call quality isn't up to par, is the provider's solution a page of frequently asked questions and an email address for contacting technicians? 8x8's Rees said that with the days of erratic Internet performance long (at least a year) in the past, most current problems result from bad LAN setups, including culprits such as faulty wiring and misconfigured routers. That's the kind of problem that a set of generic answers can't begin to address. 8x8 puts customers in touch with wiring specialist CSI Inc. when they need more individualized help.

From all this, it's clear that all Internet VoIP is not created equal. And even though you may be shelling out only $50 per month on your credit card for unlimited nationwide calling, it doesn't mean that all you can do is pay your money and take your chances.

Thank : VoIP-News