NY Times: In Internet Calling, Skype Is Living Up to the H..

Archived from groups: comp.dcom.voice-over-ip (More info?)

New York Times
September 5, 2004
TECHNO FILES

In Internet Calling, Skype Is Living Up to the Hype
By JAMES FALLOWS


Picture:
http://graphics7.nytimes.com/image [...] ch.583.jpg


HOW big a deal will Skype turn out to be? I have no idea whether the
company itself, which was founded one year ago, will someday come to
epitomize and dominate a particular booming business, the way Google,
eBay and Amazon now do. But I feel confident that the service it
provides will be attractive to most people who give it a serious look.

Skype, a made-up term that rhymes with "tripe," is the most popular
and sexiest application of VoIP, which doesn't rhyme with anything.
VoIP - sometimes pronounced letter by letter, like C.I.A., and at
other times as a word - stands for voice over Internet protocol.
Essentially, it is a way of allowing a computer with a broadband
connection to serve as a telephone.

This new form of conveying voice messages has so many advantages over
traditional systems that the whole telecommunications industry is
scrambling to see how fast it can shift traffic onto the Internet.
AT&T, for example, is no longer recruiting new home customers, but it
is offering many new VoIP services. Dozens of other companies - new
ones like Vonage and established ones like Verizon - are selling VoIP
services, too.

Skype's distinction is that, for now at least, it is the easiest,
fastest and cheapest way for individual customers to begin using VoIP.
It works this way:

First, you download free software from skype.com. Skype runs on most
major operating systems, including Windows XP and 2000, Linux, Pocket
PC for portable devices and, as of this summer, Mac OS. On three of
the computers on which I installed it, it ran with no tweaking at all.
On the fourth, I had to change one setting for the sound card,
following easy instructions on the site.

While running, Skype sits in a little window, like an
instant-messenger program, and lets you to talk with other users in
two ways. If the other person has Skype installed, you can talk as
long as you want, free, and with sound quality that is startlingly
better than that of a normal phone connection. Over the years, I have
learned to say "that's 'F' as in Frank" when spelling my last name on
the phone, because normal phone lines don't carry the frequencies that
distinguish "F" from "S." Listening to a conversation on Skype, by
contrast, is like listening to a radio program over streaming audio.
The sound comes from speakers that are built into most laptop
computers or attached to most desktops.

You'll need a microphone. Most laptops come with nearly invisible but
quite effective tiny microphones embedded near the keyboard. (It may
look odd to be talking to your laptop while using Skype, but in the
cellphone age, we've all seen worse.) At either a desktop or a laptop
computer, you can use a separate microphone or, less awkwardly, a
phone handset or headset that plugs into a computer port. Skype sells
headsets for $15 and up. I got the cheapest model, which works fine.

You can also reach people who don't use Skype, through a new service
called SkypeOut. This allows you to dial nearly any cellular or
land-line telephone number in any country and talk. Though it isn't
free, it's really cheap. Skype's prices are in euros - its founders
are Scandinavian, the main programmers are Estonian and its
headquarters are in Luxembourg - and they average two or three
American cents a minute, at any time of day. With a credit card, you
buy calling time in units of 10 euros ($12.18), which are deducted
automatically as you talk.

I started with 10 euros. After my wife talked to her sister in Italy
for a half-hour and I made one quick call to the Philippines and five
more within the United States, we still had 9.10 euros left.

Another time, I spoke from Washington simultaneously with my son in
San Francisco and his business partner who was visiting Bangalore,
India. (Up to five parties can participate in a Skype conference
call.) All of us were at computers running Skype, so the conversation
was free. The sound quality was sharp; it was about like speaking in
person, and the connection had none of the satellite-bounce delay of
normal transoceanic phone calls. Skype also allows file transfers and
instant text messages during these computer-to-computer sessions.

There is one huge drawback: Skype works best from a fully connected
computer, which runs counter to the whole trend of ever more mobile
communication. At the end of Skype's first year in business, I spoke
with its co-founder, Niklas Zennstrom - via SkypeOut, on his cellphone
in London - about his ambitions for the second year. High on his list
were partnerships with manufacturers of cellphones and personal
digital assistants, to build in compatibility with Skype. The company
will also sustain its push to sign up new users. Skype says it has
about 10 million users in 212 countries, with an average of more than
600,000 logged on at any given time.

SKYPE illustrates network economics in the purest form: free
connections within the network become more valuable to each user as
more users sign up. Because of the system's peer-to-peer design,
loosely related to the Kazaa file-sharing program that Mr. Zennstrom
and Skype's other co-founder, Janus Friis, invented four years ago,
the system scales well - that is, it doesn't bog down as more users
join. The peer-to-peer design also allows it to work behind most
Internet firewalls.

Skype's own economics, including its promise that it will never impose
a charge for Skype-to-Skype connections, depend on maintaining its
rock-bottom cost structure and slowly adding revenue, through services
like SkypeOut and future voice-mail and video-call services. The drive
to hold down costs is also what originally took Mr. Zennstrom, a
Swede, and Mr. Friis, a Dane, to Estonia. As Mr. Zennstrom sees it,
during the "bubble years" in Sweden, programmers lost some of the
hungriness and hustle he could still find in the Baltics.

The risks make it hard to predict the company's future. The world's
existing telecom companies, battered for more than a decade by
technical, regulatory and marketing changes, will presumably want to
answer this latest challenge. Mr. Zennstrom says the telecoms should
view Skype as healthily "disruptive technology" and respond by
reinventing their business - as I.B.M. has done since the rise of the
personal computer - instead of pouting their way into decline.

From the individual user's point of view, there are also questions
about whether this new form of instant access could become as
oppressively intrusive as e-mail often seems. But at this moment, it's
hard to resist.


James Fallows is a national correspondent for TheAtlantic Monthly.


http://www.nytimes.com/2004/09/05/ [...] 5tech.html