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Skype Names Carrier Partners

Light Reading
News Analysis
Light Reading
7/23/2004

Skype has named the four initial carriers that will terminate the VOIP traffic generated by its soon-to-be-launched commercial service (see Skype Signs Four Carrier Deals).

As Light Reading reported last week, Level 3 Communications Inc. (Nasdaq: LVLT) is among those to have secured a contract (see Skype Signs Up Carrier Partners and Level 3 Bags Skype Deal).

The other three are European operator Colt Telecom Group plc (Nasdaq: COLT; London: CTM.L), international wholesaler Teleglobe International Holdings Ltd. (Nasdaq: TLGB), and VOIP carrier iBasis Inc. (OTC: IBAS). (See Skype Uses iBasis for SkypeOut.)

A Skype spokeswoman says Skype was approached by a number of network operators with a view to terminating its commercial traffic, "but only a few could meet our interoperability requirements. We chose those that could provide SIP interoperability and a decent price."

The carrier experience of members of the Skype team, particularly its founder -- KaZaA Founder, Niklas Zennstrom -- who spent about nine years at Scandinavian service provider Tele2 AB (Nasdaq: TLTO), gives the company adequate in-house knowledge and contacts to make the right choices, says the spokeswoman.

And this is not the end of the process, as Skype is "open to striking further deals" with other carriers, she adds.

The financial and contract duration terms are being kept under wraps.

Privately held Skype currently provides only free services but has been building up to the launch of its paid-for VOIP offering for some months (see Skype Plans Some Ins & Outs). Its first service, which allows its users to make outgoing calls to any standard telephone number from their PCs, will be called SkypeOut, to be followed by a service, called -- symmetrically enough -- SkypeIn, that will allow its users to receive calls from any fixed or mobile line.

SkypeOut is due to launch in "the very near future," says the spokeswoman (though not today!), while SkypeIn will be available later in the year.

The VOIP service provider, which raised its second round of funding in March, has had its free software downloaded by 7.7 million individuals since its launch less than a year ago (see VCs Pump $18.8M Into Skype and Skype Me? Skype You!). On average, the software is up and running on about 400,000 PCs at any one time, according to Skype.

That level of usage has caught the attention of many standard voice service providers, which have recognized the threat from such upstarts and subsequently launched their own services. (See BT Disses VOIP Upstarts..., Skype Spooks Operators, BT Launches VOIP With Yahoo, BT Does VOIP – With Strings Attached, Verizon Launches VOIP Service, and Qwest Launches National VOIP , for examples.)

— Ray Le Maistre, International News Editor, Light Reading


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