Skype banks on billing to bring benefits

Tony Poulos
18 Oct 2012


nside Revenue Management

It would be fair to say that almost everybody has heard of Skype and equally fair to say that almost everyone with internet access has probably tried it out at some stage. What started out almost as an idyllic attempt to beat the high cost of voice calling, particularly international calls, by a couple of clever techies has now grown into the largest carrier of international voice traffic minutes in the world. It was, arguably, the first really successful OTT player.

It has single-handedly forced the cost of international calls down and has contributed significantly to the drop in revenues of many communication service providers or CSPs that relied heavily on international traffic. Despite many attempts by governments to prevent its use (presumably to protect national interests and because they could not regulate its usage or monitor calls), users found ways to circumvent the blocks.

It has been bought and sold a few times, mainly because it has a massive user base and purchasers thought they could monetize this somehow. Even though Skype to Skype calls and messages are free, it has introduced calls to mobile and landlines, and some other value added features that are chargeable. This has generated revenues that continue to grow but probably not fast enough to appease its current owner, Microsoft, which paid $8.5 billion to acquire it.

You would think that most network operators would despise Skype for eating into their revenues and profits but many of them benefit from terminating call revenues emanating from SkypeOut users. Some international operators also benefit by acting as Skype’s gateway into the PSTN world. In the United Kingdom, mobile operator “3” even encouraged Skype use by adding their app to its handsets. The idea was that because it had very low international call volumes Skype use would hardly affect its revenues, but ‘3’ customers began generating much higher local call volumes because they didn’t need to change device or networks to get the best of both worlds.

All this being said, one would be excused for thinking that Skype and CSPs might not be the best of friends, and one would probably be right. But times are changing and so must attitudes, with a growing acceptance that working with OTT players may be a more beneficial option than fighting them, especially when the battle has already been won for international calls.

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