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Who’s afraid of the Big Bad Skype?

May 03, 20042 mins

* The impact of Skype on PBXes and incumbent service providers

The Skype Web site has a quote from the Feb. 16 issue of Fortune Magazine, where FCC Chairman Michael Powell says, “I knew it was over when I downloaded Skype. When the inventors of KaZaA are distributing for free a little program that you can use to talk to anybody else, and the quality is fantastic, and it’s free – it’s over. The world will change now inevitably.”

We’re not sure we’ll go quite that far, but we do see some issues being raised that can no longer be avoided in several circles. In particular, corporate networks, service providers, and PBX manufacturers will all have to deal with the issue of peer-to-peer applications sooner or later. Let’s take them in inverse order.

From the perspective of the PBX manufacturers, what we see here is a softphone application that will perform a few of the functions of the IP PBX. The on-screen app does a bit of presence management, and you certainly have the ability to have a conversation. This bolsters our argument that the IP PBX has to be viewed as a lot more than just cheap telephony, and the integration of applications into the IP PBX infrastructure is key to the adoption of these devices.

We’re also not sure there’s a great threat to the incumbent service providers. Long-distance revenue from individuals who have not shopped aggressively are threatened the most. For instance, if residential users are already paying around three cents per minute for long distance, then moving to “free” long distance isn’t a great incentive unless you’re on the phone for hours at a time. The incentive is even less for large corporate users, where the domestic long distance rate is starting to creep under a penny a minute. Also, in it’s current PC-client format, you’re not likely to want to be tied to your PC as opposed to being able to roam around the house with a traditional phone. Then there are the issues like E-911 that clearly point to having at least one “real” phone around.

The biggest threat (and opportunity) that we see is in the control of corporate networks where Skype, as yet another peer-to-peer application, can have a major impact. That’s the subject of our next newsletter.