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VoIP Systems

MW13: Skype Waits for Operators to Woo It

NICE, France -- Management World 2013 -- Skype wants to work with the telecom industry. It really does. But the voice-over-IP service provider hasn't found the most willing partners in the network operators.

Speaking at Management World Tuesday, Neil Ward, general manager of global business operations at Skype, told the audience that Skype brings its 1.5 billion downloads to the table, along with Microsoft Corp.'s three billion end points, but that it is "waiting to be wooed" by the operators, not "begging for favors" like it might have early on.

One of the most basic ways that Skype wants to partner with operators is through carrier billing, but Ward said that even that hasn't been an easy road with most. Instead of working directly with them, it had to forge a deal with MACH to offer carrier billing on an aggregated basis in 50 countries, although it has yet to name the operators that support it. (See Skype's Big Billing Break.)

"We can do some damage with carriers as partners and change the revenue model," Ward said, admitting that revenue generation for Skype is primarily a scale game. The carriers will have to play catch up, he said, "which is a shame for us, because it's somewhere they should be adding value."

Ward said the deals with operators have been a trial and error process. He's seen some admirable forward thinking from some, especially in China, but has been limited by the competitive environment in the U.S. that's driven pricing down to a neutral point.

For their part, the operators have taken a lot of different approaches to Skype. Most have resisted it from the start, but warmed to it when forced by its popularity. Some, like France Télécom – Orange, T-Mobile (UK) and Telefónica SA, built their own competitive VoIP and video chat responses. (See Orange Finds Its Web Services Voice, Et Tu, Telefonica? and T-Mobile Tests Mobile VoIP in UK.)

Others have actually been successful in forging partnerships with Skype on a limited basis. Verizon Communications Inc., AT&T Inc. and 3 have all worked with the VoIP vendor in the past to route calls over their 3G networks. On Verizon, Skype was included at launch on some handsets, but customers were required to purchase both a voice and data plan, so the over-the-top company couldn't cannibalize its voice revenues. (See What's AT&T Getting from Skype? and Verizon Wireless Gets Skype.)

Others still, including Comcast Corp. and TeliaSonera AB, have tried to charge a premium for the VoIP service, but ultimately gave up when they found that the prevalence of free alternatives made it a non-starter. (See Comcast Shuts Premium Skype Service and TeliaSonera Abandons VoIP Charge.)

The Skype boss wasn't forthcoming on what's ahead for the company, but he did say that Skype is trying to think about 4G and how the richness of the VoIP experience develops against it. He also hinted at future Xbox integration and said that WebRTC is a "welcome innovation" for Skype and Microsoft.

"We‘re a fully integrated division of Microsoft, so we have a shared destiny," Ward said. "I think it will drive partnerships."

— Sarah Reedy, Senior Editor, Light Reading

mt330404 5/15/2013 | 6:23:38 PM
re: MW13: Skype Waits for Operators to Woo It "Most have resisted it from the start, but warmed to it when forced by its popularity." Sounds like my old HS prom date
lanbrown 5/15/2013 | 2:56:42 AM
re: MW13: Skype Waits for Operators to Woo It Sure IPv4 can. IPv6 is just 64-bits for the network portion compared to IPv4 is a total of 32-bits. The issue with using IPv4 is that the carriers do not have enough address space so they have to use NAT. NAT causes problems due to the fact that you have many clients behind a single address so an incoming call cannot make it through as the device handling the NAT doesn't know which client that call is actually for. So that means you need to have a server in the middle to handle the call between the two and that defeats the purpose.

IPv4 is fully capable of working in a real-time always on world; there just isn't enough address space to handle everyone.
elgato990 5/14/2013 | 6:34:49 PM
re: MW13: Skype Waits for Operators to Woo It Skype's inability to work with IPv6 is a show-stopper for carriers. Watch VoLTE, it will be all IPv6. IPv4 cannot work in the real-time always-on world
lanbrown 5/14/2013 | 5:58:05 PM
re: MW13: Skype Waits for Operators to Woo It Why would operators want to deal with Microsoft? Carriers will see another vendor lock in. Microsoft does not have a good track record here and they are also willing to dump and run too. Remember the Kin? It didnGÇÖt sell and Microsoft quickly dumped it. Microsoft dumped the WP7 customers as well. Man carriers also view that anything Microsoft touches will go up in price down the road.

Microsoft doesn't have a clue what the consumer actually wants. They pushed Metro onto everything and testers and analysts were saying how terrible it was. Did Microsoft listen? Nope. Now you see Microsoft trying to reverse course and will make an update to Windows 8 more Windows 7 like.

Skype has many issues with it. They don't provide 911 service and many countries want Skype to act like a real carrier if it wants into that space. Skype doesn't want to act like a real carrier though. That is going to hurt their prospects into anyone willing to forge a partnership with them. Skype might try to skirt the law, mobile carriers cannot otherwise they risk quite a bit in the process. They could see their spectrum taken away, loss of government contracts, not being able to acquire additional spectrum, etc.
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