Is there a future for international voice?

Posted on December 1, 2006 / 2 Comments

Here is what Telegeography has to say on the subject:

Computer-based Voice over IP (VoIP) is nothing new, but Skype is the first such service to break into the mainstream, attracting millions of users worldwide. Skype had 1 million 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 136 million registered users, and the number of users online now regularly exceeds 8 million. These users generated about 6.6 billion minutes of traffic in the third quarter of 2006, and are on track to make over 27 billion minutes of PC-to-PC calls this year. 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 264 billion minutes. Computer-to-computer traffic between Skype users in 2005 was equivalent to 2.9 percent of international carrier traffic in 2005 and approximately 4.4 percent 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.”

2 Comments

Divakar Goswami
December 1, 2006, 12:06 pm
“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.”

What kind of an inane statement is that, IP traffic is not the same thing as Internet. It’s a poor analysis coming from the research director at Telegeo. Traditional international carriers are the ones who own a lot of the submarine cable capacity not Skype or Vonage or any of the others who ride on the infrastructure of the telcos to provide PC-PC calling. More than anyone else, Telegeography should be in the position to know that voice traffic is a small component of total traffic although revenue still predominantly comes from voice. But as voice increasingly moves to IP, the carriers will probably have to develop a different business model to remain financially viable. But they will not keel over and disappear! Already international prices offered by PSTN are coming down so rapidly that for some routes to the USA or UK, I wouldn’t bother using Skpeout or even Skype because its so cheap and saves me the hassle of Skype.
Divakar Goswami
December 1, 2006, 12:30 pm
To add to the above statement. The traditional telcos are the largest generators of VoIP traffic as research in our region seems to indicate. VoIP services provided by telcos are 40-60% cheaper than regular international calls. The telcos are already exploiting the cost advantages of IP technology in their voice business. So it isn’t as if Skype is using VoIP and telcos aren’t, the latter are the biggest users and providers of VoIP.

At LIRNeasia we are a big fan of Skype and use it for our conferences and even Skypecasting our colloquium. But the extent of PC ownership in our part of the world should infuse some realism about the widespread use of Skype. I am aware that now with Skype phones one does not require a PC, but in order to use the Skype phone ($200 ) broadband connectivity is a prerequisite, whether over 3G (wireless) or ADSL (wired).