There is a new joke going around, or at least there should be. It goes, ‘How many Telcos does it take to write a new Skype,’ The answer is of course that we don’t need one, and that it would take enough telcos to form a global monopoly, and then they could take as long as they liked but by then no-one would use it.
The idea has emerged this week from a top US analyst, Anton Wahlman of ThinkEquity, that as a first step operators, led (Oxymoron) by AT&T, would build this for fixed line networks, and then migrate it to mobile networks.
Okay we have to admit it’s not complete insanity, although it’s close.
There is some sense in building a single client piece of software which supports zero rate VoIP across a single network and cheap services across mixed broadband networks where access has already been paid for. This would be worth doing only so that Skype cannot get the miniscule piece of revenue that such a system throws up, and that it goes instead to the telcos.
Wahlman says that AT&T plus 10 to 15 incumbent telecom carriers, including British Telecom, Deutsche Telecom and NTT, are plotting the demise of Skype with a system to be launched in 2009, eventually shifted to the mobile phone and used as a lure for selling other services such as video.
It’s easier to list the reasons why this will not happen than the reasons it will. First most of these companies already offer something like this, except that it uses their existing networks, not P2P and is based on SIP.
Secondly they would have to market it really hard to make a dent in the lead that Skype has. We know of people that use Skype to make a call that would cost nothing if they placed the call across the PSTN. People love, buggy, halting sub-standard voice, and prefer it to the real thing.
In all those countries discount wholesaled telephony rates already exist which are as low as Skype, and it is only brand which has made Skype cool enough to be usable.
There is the fact that Skype isn’t actually making its owner, eBay any money and that it relies on PCs to hold the directory, and that shifting this model wholesale to handsets is virtually impossible.
Finally this is a repeat of the Instant Messaging wars, where all the big and powerful cellcos said that they would replace SMS with IM after MMS had failed. We are all still using SMS, and these efforts have been abandoned, because telcos and cellcos can’t write software. In the end the only new IMs that have been implemented are those from Microsoft, and guess what? They offer IP based voice contact already.
So the outcome will be that this whole group will go to Microsoft and ask it to write a Skype replacement sometime after they have failed to get it work. And if it ever gets written, no-one will use it.
The marketing conundrum alone kills it. To beat Skype they have to market the hell out of it. But if they do that they accelerate the rate of voice price erosion on their networks. And then export the same to their cellular networks. So no-one will market it. Hence dead.
Given that decent IP voice takes at the very least 48 Kbps and that CDMA gives us neat voice in around 12 Kbps, which suggests that the cellcos will be queuing up to sell flat rate broadband wireless, that will undermine existing voice revenues, and take up 4 times the bandwidth on their networks.
Wahlman explains that only internal network calls would be free and that network to network calls would cost reasonable money. But the telcos can already do this, as can cellcos with their existing networks.
How many analysts does it take to predict the demise of a popular technology like Skype? One, but it takes a lot more before anyone believes it will create anything meaningful.