Monday, March 28, 2005

Meet the New Ma Bell

Folks that work with me regularly know that I'm a huge fan of a revolutionary communications company called Skype. For years, I've been telling anybody that would listen that the communications industry would experience a gale of creative destruction as the Internet and World Wide Web evolved.

While it may seem that the communications industry already has been disrupted by new technologies, in reality the wave of creative destruction has just begun. Skype is one of the companies that has potential to relegate many of incumbent operators to the telecom graveyard.

The Luxembourg-based startup has so far signed up 29 million registered users for its free Net phone calling software--a unique version of voice over Internet Protocol, or VoIP--making it one of the fastest-growing services on the Net. Now the company aims to generate profits by offering paid services that promise to make its Net-only product significantly more useful to consumers--and potentially more lethal to traditional phone providers.

Last week, Skype quietly unveiled test versions of two new paid products--voice mail and a service dubbed SkypeIn that lets subscribers obtain ordinary telephone numbers. SkypeIn represents a potential watershed, since it will enable Skype subscribers for the first time to receive incoming calls from the hundreds of millions of people who still use traditional phone services. Additionally, Skype is working with equipment makers to develop hardware that will connect conventional phones to its free software and paid services. German giant Siemens, for one, has already released a Skype adapter for cordless phones in Europe. New devices are expected soon in the United States, from companies including Vtech and iMate, that will let people make Skype calls using an ordinary handset, rather than a PC.

Needless to say, Skype's efforts to bridge the Internet and the traditional phone network could pose a major headache for traditional phone companies and other VoIP upstarts alike in the months ahead.


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