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Free? Skype 2011

Time:2010-06-03 14:24Press:times
Skype takes risky step by charging for Skype-to-Skype Skype is introducing an application for the iPhone, iPod touch an

Skype takes risky step by charging for Skype-to-Skype

Skype is introducing an application for the iPhone, iPod touch and iPad 3G, requiring iPhone OS version 3.0. The app can be downloaded for free. Skype is offering its usual low rates for (international) calls to fixed and mobile numbers. Skype-to-Skype will be free until the end of the year, but, in a unprecedented move by the company, will become a paid service thereafter, with a “small monthly fee”. Skype-to-Skype over Wi-Fi will remain free. Skype has also improved overall sound quality.

For Skype, this “small fee” is a major change in the development of the company. What began as a free VoIP application for PCs soon became a business model based on "upselling". Good functions, easy use and an increasingly good sound quality were the bait to bring in as many “registered users” as possible, who then paid for services offered. The famous 'monetisation' problem was addressed by SkypeOut’s small fee for calls to landlines and mobile numbers, and SkypeIn, available in 25 countries, which lets Skype customers receive calls from fixed and mobile lines. The starting point however was always ‘on-net’ calling, and so Skype-to-Skype was always free. At the end of 2009, Skype had 560 million registered users, including an 91 million active users, as estimated by Telecompaper.

Stepping into the mobile world was a major move due to mobile substitution and because fixed telephony rates were falling, especially for international calls. This would have decreased the appeal of Skype, and the scope for earning a margin too. Yet the transition could not be made without a struggle. Several operators worked against and prevented Skype use. 3G UK was one notable exception; Skype services have been available there for years. But there also one sees: Skype-to-Skype is free.

Skype is now asking money for Skype-to-Skype calls, at least for Apple users, and the company thus opens a new chapter. Who initiated the move? Skype itself? Apple? or operator partners?
- Skype: it would be a clever move for Skype to take part in the huge success of everything coming out of the Apple factory. Skype would be opening an important new source of income, mainly from SkypeOut subscribers who already have Skype credit, and will be receptive to up-selling. The number of SkypeOut users is unknown but it is probably a minority compared to all active users. If the number of minutes is used as a guideline -SkypeOut minutes make up around 12 percent of Skype-to-Skype minutes- this would involve about 10 million people.
- Apple seems to have no direct interest here, other than an eventual share in revenue.
- Operators: they will suffer less from Skype when the service is no longer free. The highly regulated voice revenue (MTA, roaming) is already under pressure not sufficiently offset by growth in data subscriptions. Perhaps these operators too can share in new revenue.

Still, the move seems to have been initiated by Skype itself. Sharing revenue with partners could soon become an administrative nightmare, as Skype would have to enter a partnership with all operators. In addition, Skype with its planned IPO has now every reason to take this step.

It is also a risky move. Skype gets the chance to tap a new revenue stream, but it remains to be seen whether many users are prepared to sign up to a Skype subscription in addition to their voice and data packages. Chances are that customers will lean more towards Wi-Fi. There is also a risk that Skype will lose its hard-earned image as a provider of free services.