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Tech Report – Waiting for Voice-over-Internet



By Michael Connolly

Yesterday's news that eBay was selling a majority stake in Skype, its Internet-based phone service, to a private equity group hopefully marks the beginning of new era for a technology that has promised much but delivered surprisingly little in its short and turbulent history.

eBay originally purchased Skype for $4.1 billion back in 2005, a price that had more to do with keeping the start-up out of the hands of Google than any justification on the business front. The theory put forward by Meg Whitman, eBay's then CEO, was that buyers and sellers would use the service to make eBay's core auction house business more efficient. This unlikely scenario never played out in real life and yesterday both eBay and the financial markets were happy to see the company cut its losses.

The fact that Skype will now operate as a stand-alone private business is expected to give the whole VoIP (voice-over-Internet-protocol) industry a big boost in the years to come. Despite the many communication innovations over the last ten years, the inability of the Internet to replace the public switched telephone network (PSTN) in any meaningful way has been one of the more baffling developments.

Part of the reason has been the response of the established telephone and cable providers and their position as the driving forces behind broadband expansion and adoption. Their ability to package traditional phone lines along with high-speed Internet and TV access has often obscured the price advantage of VoIP and made switching less urgent. Companies like Vonage, with its excellent $24.99-a-month World plan, have been drowned out as giant service providers like Cablevision and Verizon do battle for control of our living rooms.

The other problems have been more typical of a fledgling technology: a poor user-experience as the technical bugs are ironed out, and a number of competing services, none of which show any sign of wanting to work together. There are legions of Skype users that have tried the service once, only to experience poor quality audio and video and numerous disconnections. And that's after making a regular landline call to make sure the other party is signed in!

All the elements for efficient and open VoIP are there already and, to no-one's surprise, Apple (iChat), Google (Google Talk) and Microsoft are leading the way in adapting existing IM and e-mail services to accommodate audio and video. The freeing-up of Skype to innovate and pursue customer aspirations instead of strategic corporate goals can only help accelerate the process.   



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