VoIP set to upset telcos

Skype is sold and Woosh launches voice. That could mark trouble for telcos

Voice over IP is proving its worth as a disruptive technology with the sale of VoIP peer-to-peer provider Skype for US$2.6 billion (NZ$3.7 billion) and local wireless operator Woosh’s launch of its own voice service.

Skype has 50 million active users on its book, and claims to be adding 150,000 new users a day. Yet it is generating revenue of only US$60 million this year, meaning most of its customers spend little over a dollar a year.

Skype expects revenue to hit US$200 million next year and presumably eBay, its new owner, will be intent on shaking up the entire global telco sector with its new purchase.

However, it’s not all plain sailing for VoIP services like Skype. The Chinese government is blocking Skype and other VoIP services and commercial players, such as network operators, are also taking a close look at traffic patterns to see if they have to put up with a free service that could potentially decimate their existing customer base.

Voice calls are still worth around $1 billion a year to Telecom, but year-on-year revenue from voice calls is flat and is expected to fall in the years ahead. In Australia, Telstra has already discovered the voice market isn’t what it was and claims VoIP is causing multimillion-dollar losses in its fixed-line business.

Woosh’s entry is only set to shake things up further, at least on a local level. With calls to any national or most international destinations set at ten cents per minute, customers are faced with a distinct saving. Woosh puts that at around 50% for residential customers and as high as 70% for small business users, its target market of choice.

Quite what this will mean for the local industry is still to be seen, but at the very least broadband customers have a range of options for voice calling as operators struggle with the idea that voice is just another packet on the network.

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