Millennial Perspective: Internet Telecom's Pioneer


In part 2 of a two-part series on telecommunication, Paffenbarger discusses the successes and future of Skype.

Skype is highly recognized in the world of Voice over Internet Protocol (VoIP), the technology challenging telecommunication's status quo. The company was first launched in 2003 in Luxembourg. Since the premiere of Skype, the company has grown to become the standard for all companies hoping to enter the field of online phone service. In 2009 it had 520 million registered users in almost every country with Internet connection. According to their website:

Skype is software that enables the world’s conversations. Millions of individuals and businesses use Skype to make free video and voice calls, send instant messages and share files with other Skype users. Every day, people everywhere also use Skype to make low-cost calls to landlines and mobiles.

The company itself brought in $185 million for Ebay in the last quarter of 2009 and was the fastest-growing part of Ebay’s business.

Although the cost to call PC-to-PC is completely free, Skype makes its money from international SMS (Short Message Service) and long-distance PC to fixed lines calls. Recently, EBay sold 56 percent of the company’s stock to bidders and left founders Niklas Zennström and Janus Friis with 13 percent of profits and two chairs on the Board of Directors. Although the founders are unhappy with EBay’s decision, the company’s CEO John J. Donahoe believes "Skype will be well positioned to move forward under new owners with ownership and control over its core technology." Skype became a household name after the publicity of the arrangement.

Skype is recognized as the first VoIP, and media have been newly attracted to covering its story. New publicity has driven popularity and raised user numbers around the world. Recently, Oprah Winfrey Webcast has setup the Oprah Book Club over the service's homepage. Oprah offered users the chance to view a webcast via Skype with famous authors reading through their novels. For ten weeks Oprah and Eckhart Tolle produced the show for Tolle’s book A New Earth: Get Ready to be Awakened. The publicity that was created by this event generated close to 750,000 viewers from around 139 different countries. New users logged on just to see the readings and enjoy Oprah’s Skype experience. Oprah has this to say about Skype: “With about half a million views this could possibly be the world's largest classroom.” Evidently Oprah couldn’t get enough of the services, because last May she dedicated an entire show to Skype entitled “Where the Skype are you?” With Oprah’s support the company looks to pull in many tech savvy viewers.

Skype now accounts for eight percent of all outgoing global calls. The success of Skype has propelled the company to be recognized amongst the top global telecommunication services. Not only does Skype function as a social medium, it is also a money-saving tool for businesses of the future. With only five years of experience under the company’s belt, its projections for future growth in the marketplace look more than healthy. Skype has come to revolutionize phone bills and the way society is controlled by the industry. Say goodbye to costly long-distance phoning, and hello to an efficient Skype, or other VoIP solution.

Skype is not only beneficial to the daily activities of any business; it is specifically an influential tool of top entertainment industries. ESPN has adopted the use of Skype to engage in interviews that they would previously have not been able to do. With the fast-paced setup of Skype’s video conferencing, ESPN was able to interview the quarterback from Oregon during the always-busy Thanksgiving weekend. UCLA and Arizona State are both broadcasting through Skype. Skype’s ESPN partnership is bringing the public more information about the service, and increasing the awareness of VoIPs. Soon, Skype and other forms of video communication will be integrated into mainstream media.

Skype is looking ahead towards a future where all communication will go through Internet services. Josh Silverman recently stepped up to the plate as Skype’s new CEO. He hopes to better develop Skype’s popularity in the working world. Silverman promises improvements in technology and customer service. Jonathan Rosenberg has been hired as the new technologist to move Skype along further to match future competitors. Previously a “Cisco Fellow” working in the Voice Technology Group at Cisco System, he set strategies for their own business voice system. Skype’s tactical strategies for its technological advancements are riding on Rosenberg’s employment. On Rosenberg’s website, he explains his qualifications and hopes for a better Skype of the future.

Skype is preparing for competition that has already began to make its mark in the marketplace. While Skype has been a headline catcher, most people don’t recognize the variety of VoIP services available today. At you can find ratings and categorization of VoIPs to entice potential customers. The site provides information on top competitors of Skype and illustrates each VoIP’s unique niche in the market. One provider, JaJah, allows callers to type in their number and the number they wish to reach. The service calls both numbers and connects the lines. Jajah phone calls cost about 98% less than those of original long-distance rates. Open Wengo, Vbuzzer, Ichat, and ComBOTS are all different varieties of VoIP. Google Talk is beginning to gain recognition too, with its call options and instant messaging service. These companies have barely scratched the surface of what VoIP’s popularity will do in the market.

Skype’s most threatening emerging competitor is Ooma. Ooma offers a one-time installation of an Ooma hub which is then hooked up to any high-speed internet connection for an outright fee of 249.99. Once installed Ooma makes free international calls. Ooma promises in its mission statement to free consumers from the tyranny of phone companies: “We took into account everything that was wrong with phone service today - it's pricey, limited, and inflexible - and we made it our mission to create a better customer phoning experience. So now, when you buy an Ooma system, you own your dial tone. This means free calls in the U.S., rock-bottom international calls, and no more mysterious surcharges for premium services.”. The Ooma Telo launched on October 1st 2009, and its popularity shocked the company, who was unsure about the initial reaction. Ooma now offers it service to Wi-Fi connected smart phones for low long-distance calling. The company has recently been featured on the Today show and won the Network Products Guide Production Innovation award for 2009. The company is working on developing a mobile device.

As of late, Skype has introduced Skype for SIP and Skype for Asterisk. “These solutions enable your PBX to be configured so your employees will be able to make Skype calls directly from their existing desk phones, without needing any new training. And with click-to-call buttons on your website and emails customers can reach you for free when they use Skype.” These configurations make calls completely free after an initial setup, and long-distance phone conversations become unbelievably inexpensive. Skype will soon be the new standard for small businesses who can’t afford large phone bills but are still involved in global growth.

Skype is an intangible asset that businesses are actively pursuing, and employees are beginning to recognize the benefits of telecommuting through Skype and other VoIP services. It is predicted that by the year 2016 some 43% of the American working class will occasionally telecommute. Skype's persistent leadership in the field and the companies likely to compete with it make this figure a strong possibility.

Elizabeth Paffenbarger is a student at Chapman University.