Back to Tech Blog homepage
Skype vs Telcos
December 4, 2006
Will computer-based voice communications services like Skype (now owned by eBay) eliminate the need for international carriers? Not anytime soon, according to data preparted by the Washington-based TeleGeography consultancy.
Computer-based Voice over IP (VoIP) is nothing new, but Skype was the first PC-to-PC service to break into the mainstream, attracting millions of users worldwide. Skype had 1m simultaneous users within six months of the release of its first version for Windows in July 2004. By the end of the third quarter of 2006, Skype had 136m registered users, and the number of users online now regularly exceeds 8m.
These users generated about 6.6bn minutes of traffic in the third quarter of 2006, and are on track to make over 27bn minutes of PC-to-PC calls this year. Not surprisingly, about half of Skype’s traffic is international.
This has prompted worries that Skype–and similar services–could undermine the viability of the international long-distance market. However, while the volume of international traffic routed via Skype is significant, the quantity is still small when compared to a global switched and VoIP traffic base of 264bn minutes.
Computer-to-computer traffic between Skype users in 2005 was equivalent to 2.9 per cent of international carrier traffic in 2005 and approximately 4.4 per cent of total international traffic in 2006. Furthermore, not all of Skype’s traffic is a net loss for international carriers. Skype also offers a paid "Skype Out" service, which allows Skype users to place calls to traditional telephones. The service relies on wholesale international carriers, including iBasis, Cable & Wireless, and Level 3, to terminate this traffic to the telephone network.
Still, it’s clear that VoIP services will continue to gain in popularity. "Someday, all calls will be routed over the Internet," commented Stephan Beckert, Research Director at TeleGeography. "But the numbers suggest that traditional international carriers aren’t going to disappear anytime soon."
…….meanwhile Ovum RHK, a rival telecoms consultancy based in the UK, estimates that total revenues received by the world’s mobile and fixed telecommunications operators will approach $1,400bn this year.
Fixed operator revenues will exceed mobile by 11 percent, reaching $730bn, compared to $658bn for mobile. But mobile revenues, which have been growing at 13 per cent a year compared to a sluggish 2 per cent for fixed telephony, are expected to overtake fixed by 2008.
Among regions, North America has the largest share of fixed revenues (38 per cent) while Europe has the largest portion of mobile (41 per cent).
The world’s top 10 telecom operators are Verizon ($90bn), AT&T ($80bn), NTT ($77bn), Deutsche Telecom ($76bn), Vodafone ($68bn), France Telecom ($64bn), Telefonica ($60bn), Sprint Nextel ($41bn), BellSouth ($39bn), and Telecom Italia ($38bn). AT&T will become the world’s largest single telecommunications carrier, with revenues exceeding $110bn, when its proposed merger with BellSouth is completed.
