Voice over Internet Protocol

Skype has cut Nimbuzz off.  What that means is that users of Nimbuzz’ popular mobile clients will no longer be able to make calls using the SkypeOut network.  According to Skype themselves, it was for unspecified violations of the Skype API terms and license.  Nimbuzz US General Manager Tobias Kemper provided further detail in an interview with the Inquirer:

Kemper explained that Skype wanted greater control of the quality of service and user experience, something that Nimbuzz was unwilling to do. Kemper claimed that Nimbuzz already used superior audio codecs and that it was not willing to give further control over its network to Skype.

Andy Abramson speculates that the reason for Skype’s decision has to do with a desire to not be positioned by regulators as an interconnected carrier.  There may be some truth to that, but it certainly runs counter to many of Skype’s other efforts to work with entities like, for example, Verizon and 3.

More likely, in my opinion, is the reason Skype has apparently given.  Section 3.1 of the Skype API terms gives Skype broad latitude to control third party’s experience of Skype.  If for some reason Skype felt that the Nimbuzz experience didn’t reflect well on Skype, the terms in this section of the contract give Skype the right to cut Nimbuzz off.

Otherwise, why not continue to take revenue from Nimbuzz’ thirty million subscribers?

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iPhone 3G Calls With Skype 2.0
Image by Photo Giddy via Flickr

Sometimes you have to really shake your head at the quality of the commentary on the internet.  Fact: Skype has finally released a version of Skype for iPhone that supports calling over 3G networks.  Never mind the fly in the ointment that all the commentary is  stuck on – the fact that Skype wants to charge a “small fee” for you to use it on a 3G network.  Frankly, that’s noise.  People will pay for the ability to make a high quality Skype call on 3G, and not pay their carriers long distance termination charges in foreign markets.  So long as the fee is reasonable, nobody is going to object.

There’s no point in getting your knickers in a twist over the fee.  Skype needs to make money, like any other business, and the fact that they’re charging for this service is irrelevant to the larger story it represents.

So, what does this really mean?

  • The carriers, by permitting this use of Skype on their networks, are finally coming to grips with the fact that data is now more valuable than voice.  I wouldn’t care to speculate about whether or not the carriers will receive any of Skype’s small fee, but you can be darn sure they’re licking their chops over the data plans they’ll be selling.
  • Andy Abramson wrote last week that analyst firms are predicting mobile VoIP to overtake traditional telephone service. Mobile VoIP just got a huge shot in the arm. Any skepticism about that claim as been roundly dismissed today.
  • Skype’s SILK codec just gained dramatic credibility as it proliferates to millions of handsets.  This will put serious pressure on royalty bearing wideband codecs, as vendors will find Skype’s royalty free approach increasingly attractive.
  • When iPhone OS 4.0 finally ships, minute revenues for carriers may take an even greater hit as millions of Skype on iPhone users keep Skype running continuously in the background to receive incoming calls as well as making outgoing calls.

All in all, this one small change by Skype is a portent of a huge potential shift in the power base of the communications industry.  Not bad for a five year old band of bad boys from Estonia.  Not bad at all.

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Foonz hangs up. Who’s next?

May 21, 2009

It caused a minor ripple in the VoIP blogging world today when free conference call provider Foonz threw in the towel.  It’s no surprise, however.  Free conference call services (including our own Calliflower) have been under enormous pressure from unhappy long distance carriers. Background: The “free” business model works by arbitraging inter-carrier termination fees.  Locate […]

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All we’re talking about is arbitrage

January 5, 2009

“It seems highly likely to me that at some point in the future we’ll all look back and say that 2008 was the year that the VoIP industry finally died.” That’s how I started off a piece last week which kicked off a round of commentary the likes of which I haven’t seen in a […]

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VoIP: “If you hadn’t nailed its feet to the perch, it’d be pushin’ up the daisies!”

December 31, 2008

Yesterday’s 2008: The Year that VoIP Died generated a slew of interesting responses. Jon Arnold and Andy Abramson wrote me in email to say that I had made the same points that they had.  While it’s true that I made many of the same points, my view of their meaning is perhaps different.  I don’t […]

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