WATPA: FW: In Internet Calling, Skype Is Living Up to the Hype

From: Norm Jacknis <norm@jacknis.com>
Date: Sun Sep 05 2004 - 18:14:10 EDT

FYI -- I've used Skype and found it to be a real technological advancement
in voice sent over the public Internet. I even set up my daughter with it
when she recently started college.



September 5, 2004
In Internet Calling, Skype Is Living Up to the Hype
HOW big a deal will Skype turn out to be? I have no idea whether the company
itself, which was founded one year ago, will someday come to epitomize and
dominate a particular booming business, the way Google, eBay and Amazon now
do. But I feel confident that the service it provides will be attractive to
most people who give it a serious look.
Skype, a made-up term that rhymes with "tripe," is the most popular and
sexiest application of VoIP, which doesn't rhyme with anything. VoIP -
sometimes pronounced letter by letter, like C.I.A., and at other times as a
word - stands for voice over Internet protocol. Essentially, it is a way of
allowing a computer with a broadband connection to serve as a telephone.
This new form of conveying voice messages has so many advantages over
traditional systems that the whole telecommunications industry is scrambling
to see how fast it can shift traffic onto the Internet. AT&T, for example,
is no longer recruiting new home customers, but it is offering many new VoIP
services. Dozens of other companies - new ones like Vonage and established
ones like Verizon are selling VoIP services, too.
Skype's distinction is that, for now at least, it is the easiest, fastest
and cheapest way for individual customers to begin using VoIP. It works this
First, you download free software from skype.com. Skype runs on most major
operating systems, including Windows XP and 2000, Linux, Pocket PC for
portable devices and, as of this summer, Mac OS. On three of the computers
on which I installed it, it ran with no tweaking at all. On the fourth, I
had to change one setting for the sound card, following easy instructions on
the site.
While running, Skype sits in a little window, like an instant-messenger
program, and lets you to talk with other users in two ways. If the other
person has Skype installed, you can talk as long as you want, free, and with
sound quality that is startlingly better than that of a normal phone
connection. Over the years, I have learned to say "that's 'F' as in Frank"
when spelling my last name on the phone, because normal phone lines don't
carry the frequencies that distinguish "F" from "S." Listening to a
conversation on Skype, by contrast, is like listening to a radio program
over streaming audio. The sound comes from speakers that are built into most
laptop computers or attached to most desktops.
You'll need a microphone. Most laptops come with nearly invisible but quite
effective tiny microphones embedded near the keyboard. (It may look odd to
be talking to your laptop while using Skype, but in the cellphone age, we've
all seen worse.) At either a desktop or a laptop computer, you can use a
separate microphone or, less awkwardly, a phone handset or headset that
plugs into a computer port. Skype sells headsets for $15 and up. I got the
cheapest model, which works fine.
You can also reach people who don't use Skype, through a new service called
SkypeOut. This allows you to dial nearly any cellular or land-line telephone
number in any country and talk. Though it isn't free, it's really cheap.
Skype's prices are in euros - its founders are Scandinavian, the main
programmers are Estonian and its headquarters are in Luxembourg - and they
average two or three American cents a minute, at any time of day. With a
credit card, you buy calling time in units of 10 euros ($12.18), which are
deducted automatically as you talk.
I started with 10 euros. After my wife talked to her sister in Italy for a
half-hour and I made one quick call to the Philippines and five more within
the United States, we still had 9.10 euros left.
Another time, I spoke from Washington simultaneously with my son in San
Francisco and his business partner who was visiting Bangalore, India. (Up to
five parties can participate in a Skype conference call.) All of us were at
computers running Skype, so the conversation was free. The sound quality was
sharp; it was about like speaking in person, and the connection had none of
the satellite-bounce delay of normal transoceanic phone calls. Skype also
allows file transfers and instant text messages during these
computer-to-computer sessions.
There is one huge drawback: Skype works best from a fully connected
computer, which runs counter to the whole trend of ever more mobile
communication. At the end of Skype's first year in business, I spoke with
its co-founder, Niklas Zennstrom - via SkypeOut, on his cellphone in
London - about his ambitions for the second year. High on his list were
partnerships with manufacturers of cellphones and personal digital
assistants, to build in compatibility with Skype. The company will also
sustain its push to sign up new users. Skype says it has about 10 million
users in 212 countries, with an average of more than 600,000 logged on at
any given time.
SKYPE illustrates network economics in the purest form: free connections
within the network become more valuable to each user as more users sign up.
Because of the system's peer-to-peer design, loosely related to the Kazaa
file-sharing program that Mr. Zennstrom and Skype's other co-founder, Janus
Friis, invented four years ago, the system scales well - that is, it doesn't
bog down as more users join. The peer-to-peer design also allows it to work
behind most Internet firewalls.
Skype's own economics, including its promise that it will never impose a
charge for Skype-to-Skype connections, depend on maintaining its rock-bottom
cost structure and slowly adding revenue, through services like SkypeOut and
future voice-mail and video-call services. The drive to hold down costs is
also what originally took Mr. Zennstrom, a Swede, and Mr. Friis, a Dane, to
Estonia. As Mr. Zennstrom sees it, during the "bubble years" in Sweden,
programmers lost some of the hungriness and hustle he could still find in
the Baltics.
The risks make it hard to predict the company's future. The world's existing
telecom companies, battered for more than a decade by technical, regulatory
and marketing changes, will presumably want to answer this latest challenge.
Mr. Zennstrom says the telecoms should view Skype as healthily "disruptive
technology" and respond by reinventing their business - as I.B.M has done
since the rise of the personal computer - instead of pouting their way into
>From the individual user's point of view, there are also questions about
whether this new form of instant access could become as oppressively
intrusive as e-mail often seems. But at this moment, it's hard to resist.
James Fallows is a national correspondent for TheAtlantic Monthly. E-mail:
Received on Sun Sep 5 18:16:05 2004

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