Skype broadens its calling scope
Published: 26 Jul 2004 11:40 BST
Skype, a maker of Net telephony software, on Friday announced four partnerships that will help the company enter the service arena with a calling plan that offers per-minute pricing.
The company said phone carriers Colt Telecom Group, iBasis, Level 3 Communications and Teleglobe have signed on to help it launch its SkypeOut service. Until now, privately held Skype has only distributed software that allows people to make no-cost Internet phone calls from one computing device to another -- but not with telephones. The company's new service is available now in test form.
The individuals who launched Luxembourg-based Skype also authored the software behind the Kazaa file-sharing network. Terms of the partnership agreements were not disclosed, but Skype lauded the four companies for helping it connect with the public switched telephone network.
"These companies are visionary in recognising that terminations to the legacy public telephone network can be expanded with the advent of Internet telephony and the global proliferation of broadband," Niklas Zennstrom, Skype's chief executive, said in a statement. "We will now move quickly and offer SkypeOut calls to landline and mobile phone numbers around the world."
With its new service, Skype will join several carriers, including AT&T and Vonage, that offer service based on voice over Internet Protocol. Such service is cheaper than traditional service, because VoIP routes calls over the Internet rather than over traditional networks, which are heavily regulated and taxed. Downsides to VoIP include spotty voice quality, problems with the routing of 911 calls and the service's reliance on electricity.
Some companies, including Yahoo, offer free VoIP software and services, but these typically require subscribers to use computers to make calls, rather than phones. Skype's existing product fits into this category. The company said it will continue offering the free software, which has been downloaded by more than 16 million people.
Skype's pricing model will differ from that of some other paid VoIP service providers in that it will be priced on a per-minute basis. In contrast, Verizon Communications, for example, will charge users on a monthly basis. Verizon announced its nationwide Internet calling plan on Thursday.
Skype said customers will prepay for their calling time, and the company estimates that its service will cost less than 2 cents per minute. In the test version of the service available through the company's Web site, a customer can set up an account of $12 (£6.54), $30 or $62. Accounts are charged at rates ranging from 1 cent to 6 cents per minute, depending on where the call originates and which region is being called.
Skype will also look to derive profits from the VoIP plan by trying to get subscribers to buy premium services like voice mail and conference calling.
The company has yet to say when it will formally launch the SkypeOut plan. Its venture into the commercial world, however, means that it may eventually butt heads with regulators. For now, commercial VoIP is regulation-free, but Federal Communications Commission rules are expected in the next few months.
Zennstrom said regulations "are necessary in a monopoly; VoIP is not a monopoly."
CNET News.com's Ben Charny contributed to this report.
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