Ever wonder how those “free” conferencing services work? Why did Magic Jack offer such a low price compared to legacy landline service providers? And why did this only work in the U.S.? Yet, how can Skype and other IP-based communications service providers continue to offer “free”?

Seem like the U.S. had developed subsidy programs, of which the Universal Service Fund (“USF”) was the main culprit. Idealistic politicians wanted to ensure universal access to a variety of constituencies including “High Cost” rural markets such that small service providers could offer conventional phone services at rates comparable to urban rates. So they came up with this Universal Service Fund whereby the “large” carriers would collect an additional fee (or tax) which was then paid out to the hundreds of smaller service providers in “rural” states such as Iowa and Minnesota.

But then some smart people in Iowa caught onto something. The 150+ small carriers in Iowa formed a co-operative that applied for and obtained $80MM of USF monies to set up one of the most powerful fibre networks in the U.S. Of course this meant Iowa had significant extra capacity for terminating calls.

But there was another catch.

The North American numbering system means that a minimum of 10,000 numbers had to be tied up with each “exchange” or central office (the first three digits of the local telephone number). But some of these rural service providers, each of which was assigned an “exchange”, may have had a very low number of actual customers (as low as 150) and certainly many fewer than 10,000. So they ended up with a huge surplus of unused numbers that could, however, be used to collect revenue through access charges and they had the call load capacity due to the fibre installation.

Basically if a caller made long distance calls into these “excess” numbers, the local “rural” service provider could collect, from the larger carriers, termination fees (access charges) which they, in turn, supposedly would collect from the call participants. However, the larger carriers had invoked fixed price, unlimited minutes North American calling plans; this limited their additional customer revenue while driving up their costs. Not a great business scenario.

Once the “local” providers received their funds, they would pay a portion to the conferencing service providers. Effectively it was these access charges that would generate revenues for the “Free” conferencing services. There was one major problem; suddenly larger carriers such as AT&T were getting bills for several million dollars per month; they objected and took their case to the FCC.

And the gravy train has run off the tracks … largely at the behest of the FCC according, in one case, to the Telecom Law Monitor. Two stories corroborate this:

Calliflower, a conferencing service which I have covered often, has eliminated their free calling option. According to a recent post:

There’s an old saying that you have to break an egg to make an omelette.  Today I have some sad news as well,  which is that that we are eliminating our free conference calling offering on March 25th. Eliminating the free offering has been a tough decision, and one that we’ve given a lot of thought. We’re doing it because it is simply impossible for us to continue to offer that service reliably in the face of continued opposition at the FCC in Washington DC from larger, incumbent carriers.

You’re probably asking “what do these carriers have to do with anything?” A lot, it turns out. We were able to offer Calliflower at no charge by sharing a portion of the long distance fee you paid to your carrier in order to access the conference service. Those carriers don’t want to pay anymore. In fact, we haven’t been paid by them in two years. Unfortunately, we can’t operate the service any longer without any ability to recover our costs. That’s the reason we made this very difficult decision.

And this past Monday it came out that Magic Jack is in a position to lose its “Magic” because their parent was providing services not listed in their tariffs filed with the FCC. To quote Andy:

Basically  YMAX, the CLEC, was planning to make money on access charge compensation. AT&T said, we’re not paying the rates you want to charge. Well it seems the FCC agreed. That means that MagicJack’s model of cheap no longer means, almost free or at breakeven to them, and brings to light the fact that they may now see the possibility of losing money on every call without their sister company making a profit on the access charges which subsidized what they have been doing.

Read the posts for more details. But the bottom line is that, if you want to host a conference call, you’ll pay. However, even at the rates charged today – and most are at fixed monthly rates — conference calls are orders of magnitude less expensive than ten to fifteen years ago when the telcos would charge $0.50 to >$1.00 per participant per minute.

Nobody in his right mind is going to start a service today that relies on these “subsidies”. The dilemma for Magic Jack and their parent is that they have effectively offered one year contracts to their customers and must deliver on them or otherwise compensate their customer base. It will be interesting to see how this plays out.

And how can Skype continue to offer free Skype-to-Skype calling? Because at the most basic level Skype calls are peer-to-peer between or amongst participating PC’s (or other Skype-enabled devices) with no intermediary beyond a directory service to establish the initial connection – and no termination charges. The “carrier” is essentially your Internet connections which see voice “packets”, prioritized but on a peer level with the data packets that deliver web pages or your email. But then they add in – at no cost to the user – chat and multi-party voice calling along with other services such as one-to-one video calling and file transfer. And it’s all encrypted. The user’s real costs are your local PC or other terminating device hardware cost and having a broadband or faster Internet connection. Other than for directory servers and, as a result of a recent Skype outage, super node servers, Skype has very little capital costs associated with these services.

Bottom line: even at today’s rates hosted and managed conferencing services are a bargain compared to a decade ago or earlier. But, without the cost drivers, it appears that Skype can continue to offer all its services with the only costs being for connections to the PSTN and multi-party video calling.

So where does Skype gets its revenues? Check out the most read Voice On The Web blog post (even after two years): Skype Business Model Revealed at eBay Analyst Event.

Related articles

• FCC Finds MagicJack Can’t Collect Access Charges From AT&T (blogs.forbes.com)
• Update: MagicJack Responds To FCC Ruling In AT&T Case (blogs.forbes.com)
• MagicJack trips on tariff ruling (calliflower.com)
• NetTALK positions against MagicJack and Skype (skypejournal.com)

Following the Mood Messages of a Skype employee in my Skype Conversations window I came across this last Friday: “brand new version of Skype To Go available. Dead simple to use, nothing to download, call directly from your contact list !” Curious, I went to my Skype To Go subscription where I found all six of my Skype To Go contacts had suddenly, and spontaneously, sprouted individual 647 numbers (647 being the overlay area code for Toronto’s legacy 416 area code).

Previously I had a single Toronto-based Skype To Go number which I would call to access one of my six contacts by selecting a number between “1” and “6” when I called the number. This process, using a Bluetooth connection between my BlackBerry and car audio system,  meant my “hands free” calling to this number in my car required that I actually use the keypad on my car’s “phone” panel. The new Skype To Go resolves this issue and more.

Here’s what’s new:

• Up to nine Skype To Go contacts can be designated; each with an individual Skype To Go number
• Up to five of your mobile or landline phones can be registered as valid phones to use these numbers
• When calling from a registered phone to one of the nine contacts, there is no need to wait for any voice prompts; the connection is now immediately made.
• Validated with a PIN and entering one of the registered phones’ numbers, one can call these numbers from any other phone.
• You register also the Country and Area Code you are calling from. When you move to another Country you can change the registered Country and get new local phones numbers for each of your Skype To Go contacts. But when you return to your “home” country you will get back your original Skype To Go numbers.
• The listing also shows what your charges are to these numbers below the destination number.
• You can select which of the registered numbers you want to display as your callerID when making these calls.
• What’s not changed? Your old Skype To Go number which you can still use for calling numbers not included in your Skype To Go contact list.

Skype To Go numbers can be obtained in 23 countries (note that Canada was added earlier this year):

So what’s the cost?

• If the number called is on one of your Skype subscription plans, there is no charge to landlines and mobiles in the eight countries with totally unlimited calling; for the 33 countries with unlimited calling to landlines only you pay the going Skype calling rate for calls to mobile phones (for instance, $0.317 per minute to mobile numbers in Spain). Note that Skype’s fair usage policy applies.
  
• If not on a subscription you pay, via Skype credits, the normal SkypeOut charges plus a connection fee.

Bottom line: I can now make totally hands free calls to these nine “most frequent” contacts using Skype To Go from my car via my BlackBerry or iPhone simply by pressing the “Enter” button on my steering wheel and saying “Call [Name] Other”. To simplify this process I have recorded these Skype To Go numbers under “Other” in my smartphone and Outlook address books. Back to total compliance with Ontario law regarding use of mobile phones while driving.

The bonus: I added my wife’s BlackBerry as a registered phone and she gets to call three relatives in another Canadian city at no cost when calling from Toronto’s rather large local calling area, encompassing four area codes. (With 90% of  its population spread out across a belt 100 miles wide and 4,000 miles long, Canada still has long distance charges, although they are gradually evaporating into carrier calling plans at low or no cost.)

This morning Skype issued a press release, Call Your Friends and Family Anywhere in the World For Less, announcing new consumer calling plans (subscriptions) that cover over 170 countries and introduce more granularity into the choices such as calling time, termination country(ies) and plan period (1-, 3- and 12-month).

While still awaiting to see the details (the plans will be rolled out tomorrow, May 6), it will be most interesting to see what the changes will be when calling mobile phones terminated in “caller pays” countries. According to the press release:

Skype’s range of subscriptions start from as little as €0.89* ($1.09/£.69) per month and offer effective rates as low as €0.01 ($.01/£.01) per minute to almost any destination around the globe.

With the new subscriptions, Skype users have the flexibility to customize their calling plans in just three easy steps:

1. Select the countries you want to call
2. Decide whether you want to call mobile phones, landlines or both
3. Choose the plan that best suits your needs from 1-month to 12-months or 60 minutes to unlimited

Note that these are consumer calling plans. Dan York reports that we should also see some changes for Skype for Business tomorrow, according to an email he received from Skype.

Once there has been a chance to see the details when rolled out tomorrow, I’ll probably have more commentary.

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• Skype By the Numbers: It’s Really Big (gigaom.com)
• Skype commands 13 percent of international phone calls (inquisitr.com)

Yesterday’s announcement that Skype will become available as a supported service on Verizon Wireless has to have sent a tsunami through the wireless operator world. To review the offering:

• A Skype client will be included on nine models of BlackBerry and Android smartphones in late March; current customers with these devices will be able to download the application
• Free Skype-to-Skype voice calling, both inbound and outbound, worldwide
• send and receive instant messaging (chat and presence) worldwide at no charge
• International SkypeOut calling; domestic calls come out of the customer’s voice plan
• Requires a Verizon voice and data plan
• Skype-to-Skype and SkypeOut calls as well as Skype IM activity will not impact a customer’s voice plan minutes and data plan usage.

The Background. Yesterday I wrote about the market environment and technology infrastructure that led to the ability to make this announcement

• It’s Verizon’s answer to AT&T’s forthcoming Skype for iPhone over 3G; however, given that planning and development activity have been ongoing for the past year, it’s a well thought out response with a focus on the user experience.
• The client will be a customized version of Skype Lite where the voice conversation is carried over the Verizon voice channel while presence indication, chat messages, mood messages and voice call signaling will be carried over the Verizon data channel.
• Launching a Skype voice call or chat session will be the same process as launching a traditional call.
• It’s integrated with the Address Book of the device such that all contacts can become Skype or SkypeOut contacts.
• Both the BlackBerry and Android smartphones can handle multi-tasking such that Skype “data” activity can continue to operate in the background while using other applications on the device.
• Client is optimized to take advantage of any battery life conservation features, certainly one of BlackBerry’s well known strengths.
• In response to one question at the press conference, Verizon stated they will not allow network quality to erode as a result of the additional load created by this service.
• Currently no video calling, file transfer, SMS messaging or WiFi access

Show me the money! Based on information provided by iSkoot at eComm 2008 and 3′s gradual expansion of Skype availability, it would appear at first glance that the business model involves:

• Verizon receiving a percentage of SkypeOut revenues (Skype has an affiliate program that provides referrers with 25% of SkypeOut revenues – an indicator of Skype’s margin for this service; 3 has offered SkypeOut since summer 2008)
• Skype receiving software licensing revenue associated with smartphone revenues (sales or lease) and Verizon voice/data plan revenues
• No termination charges for Skype-to-Skype calls (explains why Verizon can offer this as a free service to their data plan customers)

The implications:

• Has the potential to add 90 million Verizon customers to Skype’s user base
• Verizon customers can call over 500 million Skype accounts worldwide at no cost (probably about 100 million active accounts)
• SkypeOut becomes the de facto replacement for all Verizon’s other consumer international calling activity, especially for calls to those 44 countries on Skype’s Unlimited World Calling plans.
• Provides a subtle but significant carrier endorsement of BlackBerry and Android devices.
• Multi-tasking allows an “always on” user experience; the challenge will be when and how notifications are made of a Skype activity (presence status change, new chat message, etc.) when using other applications
• the underlying architecture takes advantage of the existing robust and scalable voice architecture while exchanging data over a wireless data service that is widely perceived as the best in the U.S due to the combination of its reliability and coverage.
• requires the installation of “Skype gateway” servers within Verizon’s infrastructure to terminate Skype calls under Verizon’s management and control, offset by the fact that there are no termination charges for Skype-to-Skype calls.

The downside: The architecture does not allow for WiFi access to Skype. As a result:

• one cannot readily make calls from WiFi access points outside the U.S. without paying roaming charges which can tend to be expensive. (Skype for iPhone on AT&T or T-Mobile’s @ Home service provide this capability.)
• calls cannot be made from locations without carrier network coverage (to a large extent Verizon’s U.S. geographical coverage addresses this issue but one can also be deep in a building with WiFi but no carrier).

The Questions:

• Will Skype Instant Messaging become a replacement for SMS messaging and cannibalize SMS revenues? Skype IM messages simply go out over the data channel as one application for the data plan.
• What happens when a Verizon customer is roaming in other countries?  Can visitors to Canada or Europe continue to use Skype at no additional cost while in Canada? or will a roaming charge apply?
• Verizon is currently offering these devices with a “Buy One Now, Get One Free” feature and a two year contract at prices ranging from $29.99 (Storm 1, 8530 Curve)to $179.99 (Storm 2). Will the lack of a low cost phone, such as 3’s Skypephone2, with Pay-As-You-Go impact adoption?
• What is the level of carrier exclusivity in the deal? Will we be seeing similar offers from T-Mobile US or AT&T any time soon? What portions of the embedded Skype software in the devices are  exclusive to Verizon?
• Who will be the first Canadian carrier to adopt the Verizon-Skype model? This will be interesting to follow given that:
  • there are no network quality issues with any of the three
  • the Bell Canada/Telus networks can not only support EVDO (same BlackBerries as offered by Verizon) but also GSM/LTE supported devices with their new HSPA+ network launched in time for the Vancouver 2010 Winter Olympics.
  • all three carriers now offer the iPhone; in this case Rogers was the original carrier with it.
• What level of support will Verizon provide for BlackBerry’s app store and Android’s market? Will Verizon facilitate and promote them or even provide an aggregated app store?

Final question: Skype stealthed its way onto AT&T 3G through the combination of supporting calling over WiFi access points (worldwide) and FCC lobbying; Skype is certainly helping to drive iPhone sales at AT&T. Can the combination of carrier-supported “free international calling”, full multi-tasking, a more robust and reliable network and the currently top selling smartphone brand in the U.S. sustain and build Verizon’s user base?

Bottom line: carriers are recognizing that Skype needs to incorporated into their infrastructure as a key element providing both uninhibited access and the network resources to ensure a high quality, positive user conversation experience. Most importantly they are discovering that Skype can become a marketing tool that drives market differentiation and user adoption.

For further commentary Carl Ford and I recorded a podcast conversation yesterday: Jim Courtney & Carl Ford Converse about Skype & VZW.

Update: Andy Abramson has been on-site at MWC and picked up some feedback: Skype, Verizon (and Andy) In the News

Photo: John Stratton, executive vice president and chief marketing officer for Verizon Wireless, and Josh Silverman, Skype’s CEO, announcing their strategic relationship to bring Skype to Verizon Wireless smartphones during a press conference at the 2010 Mobile World Congress in Barcelona, Spain earlier today. (Via Business Wire, accreditat[on not provided)

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• Skype Over 3G Now Ringing on Verizon Wireless (jkontherun.com)
• Verizon Swallows Hard And Embraces Skype (techcrunch.com)
• A Conversation with Skype CEO Josh Silverman (voiceontheweb.biz)
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• Reprise: Is WiFi Becoming the Unregulated Stealth Carrier of the Future? (voiceontheweb.biz)
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At CES 2010 last month I had the opportunity to record interviews with Skype CEO Josh Silverman as well as Russ Shaw, Vice President and General Manager of Skype Mobile and EMEA, and Matt Jordan, Enterprise Business Development Manager.

In this first interview Matt Jordan talks about the evolving Skype for Business Program. After giving an overview of the program, Matt talks about the revamped Business Control Panel (“BCP”) and how it allows an administrator to manage Skype usage across an enterprise.

While some of the BCP discussion gets a bit technical he does cover issues of security and management of individual Skype activities (such as file transfer). BCP also facilitates delegation of Skype credits for making SkypeOut calls, setting up Skype online numbers, using Skype for SIP voice channels and Skype Access. Fundamentally BCP is a central tool from which an administrator can manage the spend, report on the spend and receive call detail reports.

In the second part of the interview, Matt talks about the business model behind Skype for Business, the charges associated with using Skype for Business services. He talks about Maxim Integrated Products and how they use Skype and BCP for over 2000 paid users within an ecosystem of 5000 Skype users in 70 countries.

Matt goes on to provide some initial feedback on the Skype for SIP public beta program as well as Skype for Asterisk.

Businesses adopting the recently announced FREETALK Connect PBX will need a SkypeID generated via the Business Control Panel as their PBX identifier. In addition a FREETALK Connect administrator can then use the BCP to manage Skype credits allocation, security issues and reporting. Calls coming into a FREETALK Connect PBX via a Skype online number or Skype itself continue have no charge as well as outbound calls to a Skype user.

The entire Skype for Business program will roll out over the next few months such that by the time summer arrives all the various features should be widely available. FREETALK Connect should be available on the Skype Store at the beginning of April.

Other Skype executive interviews from CES 2010:

• Skype for Mobile: An Interview with Skype’s Russ Shaw
• A Conversation with Skype CEO Josh Silverman

Full disclosure: In Store Solutions, producer of the FREETALK Connect PBX, has become a client of Denali InterConneXions, publisher of Voice On The Web, building on the author’s previous business development experience with establishing partnerships that can assist with the promotion of a primary vendor’s offerings. A more complete statement will follow shortly.

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• Skype for SIP could save businesses big bucks (thenextweb.com)
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The past six months, with three trips to Europe, have given me the opportunity not only to experience roaming on European 3G wireless services but also the strategies and alternatives that allow me to minimize roaming charges while traveling with both a BlackBerry and iPhone. A key to the achieving this goal lies in the support available for WiFi access points in hotels, restaurants, airports and at conferences that provide robust, scalable WiFi support. But the question outstanding is why would I use both devices? The answer lies in the applications and content.

While one can theorize academically about various low cost scenarios and one attempts to use WiFi wherever feasible, in actual travel, you need access to some form of wireless service wherever you may be. For instance, if lost in a city where you don’t speak the language, Google Maps can often help get you sorted out quickly. Or find the nearest restaurant district (was a big help in Paris, for instance). But you need wireless carrier access to use these services.

So what measures can I recommend?

First step: buy an International roaming package from the home wireless carrier. Over the summer Rogers introduced European roaming packages; here’s the comparison:

The good news about these packages is that the per MB and per minute charges remain the same for any overage over the minimum expenditures. The bad news is that roaming charges are still “huge” compared to the $0.03/MB or approximately $0.10 per minute paid when on my home Rogers network. U.S.-based users should check with their “home” carriers to see if similar plans are available. Rule of thumb and current reality, however: roaming charges remain the last ultra-high margin service for wireless carriers.

So, while relatively expensive, these packages are helpful when away from a WiFi access point; however, as mentioned above, the real saving comes when you set up for using WiFi wherever possible. (In addition I encountered a couple of situations where 3G coverage was weak or non-existent; in these cases access to WiFi became essential.)

Second step: ensure you have installed both Skype and Truphone on your iPhone; you can then make voice calls from WiFi access points at prevailing Skype or Truphone rates. For instance, Skype-to-Skype calls are free while SkypeOut calls are based on using either a Skype Calling Plan subscription or Skype credits.

Third step: buy, at a minimum, a Boingo Global Mobile plan; while WiFi in hotels and restaurants is usually free or has a daily charge, Boingo Global Mobile provides access in over 70 countries at airports and often at hotels where, otherwise, you would pay a daily fee that is usually more than Boingo Global Mobile’s monthly charge.

Fourth step: put the iPhone in Airplane mode but with WiFi access turned on. In this way, no voice calls are received via a wireless carrier; also the iPhone specifically requires proactive user permission to roam on data – leave this turned off. But the iPhone applications, including Skype and Truphone, can all be used when attached to a WiFi access point. (Note: I do not give out my iPhone voice number but do use it for various tests; Google Voice is not yet available in Canada to provide multi-smartphone calling.)

So here is where I use each device:

BlackBerry Bold 9000: email (both BlackBerry email and GMail), BlackBerry Messenger 5.0, Google Maps, SocialScope – still the most comprehensive Twitter application on a smartphone; SlingPlayer Mobile for BlackBerry. Keep in mind that BlackBerry is overall more efficient for handling data due to the data compression provided by the BlackBerry Network Operations Centre architecture for managing data traffic. This ongoing wireless data compression feature is a major reason why I prefer BlackBerry for services such as Google Maps or downloading/uploading pictures in SocialScope as opposed to the iPhone when on a 3G wireless carrier network.

iPhone: main application is Skype, followed by Truphone. Very handy for making calls back to North America from hotel rooms or lobbies, restaurants as well as offices and conferences supported with WiFi access. (But you must have the relevant application open to receive calls and receive/send chat messages.) Other preferred applications include the Safari web browser (faster and more versatile than BlackBerry’s) and Facebook (which has a richer user experience than on BlackBerry) and a few applications that are unique to iPhone. Also comes in handy if the BlackBerry battery has died and I need immediate access to, say, GMail or a browser.

Bottom line: the feature that continues to dominate my preference for BlackBerry over iPhone is the keyboard; it’s a real time two-way communications device whereas the iPhone, with its superior browser capability, continues to be an information delivery device but works best for one way communication. My use of its touch screen keyboard tends to be limited to entering user names and passwords.

A few comments:

• There’s one major application missing on the BlackBerry – with its full multi-tasking capability the BlackBerry is ideally suited for Skype as a VoIP client. One can have real time chat sessions continue in background while using other applications; we experienced this with iSkoot but at this point one would expect to have seen the Skype for BlackBerry that was announced by Skype around the time of last spring’s launch of Skype for iPhone. And now that Skype for Symbian beta supports both 3G and WiFi and the FCC is supporting for “net neutrality”, the “carrier-support” argument for avoiding VoIP clients over WiFi on the BlackBerry no longer holds water. In fact, Rogers has made it clear that they have no issue with running Skype over 3G networks. Let’s hope that Skype and RIM can get the act together such that we can see a product introduction early in 2010.
• On my most recent trip I only bought the 15 minute voice package; with BlackBerry Messenger and SocialScope (for Twitter) available I found little need to make voice calls while in 3G only mode. Skype on my PC at hotel rooms and conferences as well as Skype and Truphone over iPhone addressed 95% of my voice calling needs. (Now, if I could just learn how to order a taxi in Spanish!)
• I realize most smartphone users will only have one phone. I present this post simply to provide an overview of my experience using both these devices while optimizing my roaming experience when traveling out of the home country. I need to have both devices due to not only their popularity but also the different content exchanged and user experiences for each smartphone.

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Voice On the Web’s Subscription Calling Plan page has been updated. Also Skype is offering a 25% discount on Skype Calling Plans if purchased prior to May 6, 2009.

Earlier this week Skype announced the addition of an “Unlimited Country” plan to the three plans available to Skype users in the U.S. and Canada.  At the same time Skype announced the addition of seven countries to their Calling Plan Subscriptions program which now supports 42 countries. Learning of these changes triggered a review of Skype’s Calling Plans.

One of the goals of Voice On The Web is to provide longer term reference information about Skype and other IP-based communications services. This overall reference guide is accessed via the links in the light green navigation bar above or further down the first sidebar on the right. (Improving this navigation is one of the goals for the next upgrade to Voice On The Web.) Many of these pages were written a year ago and are in the course of being updated to reflect current offerings and policies.

As a result of Skype’s announcement referenced above I have reviewed and updated the Skype Calling Plans page as there have been several changes since Skype Calling Plans were first announced a year ago:

• Six countries – India, South Africa, Argentina, Bulgaria, Columbia, Croatia, Slovenia and Thailand have been added to the various Skype Calling Plans worldwide
• An “Unlimited Country” plan has been added for Skype users in North America, providing a subscription option for those who want to call U.S. and Canadian numbers plus one additional country selected from the other 42 countries participating in the Skype Calling Plans.
• Rates for Skype “”Unlimited World” subscriptions, which now provide unlimited calling to 44 countries worldwide (up from 36), have increased to US$12.95 per month from US$9.95 per month
• A 25% discount applies to these plans if purchased prior to May 6, 2006. Click here to extend your current subscription at these discounted rates during the discount’s availability.
• Mexico remains a special case. Plans provide for unlimited calling to landlines Mexico City, Guadlajara and Monterrey. Discounted rates (which vary by plan) apply to calls outside these three cities and calls to mobile phones.
• There are unique plans for calling to Brazil, India and South Africa. None of these countries are included in any basic “Unlimited World” plan.
• Skype has modified their Fair Usage policy to a maximum of 50 numbers per day, six hours of calling per day and use by one Skype account only per subscription. All this in addition to the previous 10,000 minutes per month. Don Kennedy has written a utility, Subscription Monitor for Skype, that provides an real time accounting of your subscription status so that you know when time’s up.
• The 2 million Skype users who downloaded and installed Skype for iPhone can take advantage of these plans from any WiFi hotspot supported by the iPhone (not available to Canadians, argh!!)

Of course the most effective way to reduce SkypeOut and subscription usage is to have your contacts sign up for Skype. Skype-to-Skype voice and video calling is at the best price of all – Free!

Whenever I travel to the U.S. I am careful with usage of my BlackBerry Bold for voice calls; there’s a $0.95 per minute roaming charge for any use of it on the AT&T or T-Mobile network even before any long distance charges are considered. Calls back to Toronto from California will result in a total charge of $1.75 per minute. And, at $6.00/MB for data usage, I try to maximize my data activity via WiFi access points in hotel rooms, airports and conference press rooms. And, when I go to Mexico or Europe I look for any opportunity to make voice calls over Skype and access data services over WiFi; in fact, in Mexico, one is advised to turn off the BlackBerry. Roaming charges will easily clean out your wallet.

Recently a Los Angeles Times reporter was referred to me for more information about how he could avoid “roaming charges billing shock” in the future. He had just received a $400 roaming charge billing for using his iPhone over the Rogers network during a weekend trip to Vancouver, Canada.

At one of Andy Abramson’s famous Blogger dinners, held during a recent conference, roaming charges were identified as the number one cost issue and arbitrage opportunity existing in the wireless services market today.

Today Truphone, who has continuously demonstrated innovation in low cost wireless calling, announced their forthcoming Truphone Local Anywhere service at Mobile World Congress. From the press release:

The introduction of Truphone’s multi-country, single-SIM service will change the current experience of people with an international lifestyle.  Their mobile experience is currently characterized by frustration, brought on by constantly having to juggle multiple SIM cards and mobile phones in order to minimize their mobile costs.

In an interview with Truphone CEO Geraldine Wilson, she highlighted four key benefits of this service. On a single handset a Truphone Local Anywhere subscriber can:

• have a local number whenever travelling in a supported country
• make calls anywhere in the territory of participating carriers at “local” rates
• make international calls at reduced costs
• eliminate or minimize ”roaming” charges at most destinations

But there is also a benefit to people calling to a Truphone Local Anywhere subscriber. Personal and business calls to the subscriber can be made via the subscriber’s “local” number for the location from which the call is being placed.

Other issues:

• All numbers will be “mobile” numbers, capable of supporting SMS messaging and data activity
• The default callerID seen by the called party will be the call destination’s “Local” number but the displayed callerID can be managed to display other numbers available to the subscriber
• calls to other Truphone Local Anywhere customers will have the lowest calling rates

Geraldine was quite specific in stating that the target market includes mobile professionals, travel industry employees, expatriate workers who need a “local” number in both their home country and “on the job”, and international students. According to Geraldine, this “road warrior” market encompasses 300 million today, making over 700 million trips per year.

Why an announcement now at Mobile World Congress? While Truphone has already signed some carrier and service provider agreements for this program, they are seeking out additional carrier and MVNO partners to build out a worldwide network.

As for the infrastructure behind this service:

• the customer will receive one SIM that supports service providers in all countries
• it is a scalable, plug-and-play solution
• a customer will be able to add another carrier or service provider to the SIM over-the-air
• Truphone is seeking out non-traditional distribution channels
• it will have full data compatibility

Bottom Line: if Truphone can pull off a sufficient number of service provider relationships worldwide, Truphone Local Anywhere will have the same friction-free impact for travellers’ mobile communications activities as the introduction of the Euro provided to European travelers, eliminating the need to stop by an “exchange counter” when arriving in every country.

Update: Jon Arnold: Truphone Launches Local Anywhere Service

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• Truphone Cuts Roaming Costs for International Jet Setters (gigaom.com)
• Truphone offers local calling anywhere (news.cnet.com)

Over the past few years we have seen the evolution of several conversation communities, some simply employing instant messaging; others employing both instant messaging and voice. Skype is the primary example with its support of IM, voice and video as well as auxiliary features such as file sharing (and, as announced tonight, basic screen sharing) but we are also seeing these services diffuse into Google, via GTalk’s voice and chat capability, MSN Live via Live Messenger, and, in spite of its trying to define who they are, Yahoo. Truphone is a mobile voice calling service that I have used for a couple of years from a Nokia N95-1; it became critical in a situation I encountered in Germany two years ago. I have liked both the quality of the voice calls as well as the user interface, especially its use of the device’s native address book for initiating a call. While they have had some hiccups with their recent product launches, Truphone has become the leader in providing low cost calling from the iPhone while breaking the carrier barrier via Apple’s App Store. I will soon be reporting on Truphone Anywhere for BlackBerry. Now, under recently appointed CEO Geraldine Wilson, Truphone is making a move to grow their user base rapidly by leveraging the user bases of other services.

This evening at the MacWorld Showstoppers event Truphone announced an enhanced Truphone for iPhone providing connectivity to these four conversation communities. Supporting both instant messaging and voice conversations, voice calls to, say, Skype contacts are free provided they go over a WiFi connection. Calls to these communities can also be made over a carrier’s 3G network, usually at the cost of a local call. In addition Truphone is providing access to Twitter as one additional messaging service accessible via Truphone’s iPhone application.

In my interview this evening with new Truphone CEO Geraldine Wilson, she pointed out:

• Using Skype as an example, Truphone’s enhancements set up an appropriate Skype client on a Truphone gateway and complete the call to the Skype contact, taking advantage of Skype’s peer-to-peer architecture such that there are no resulting termination charges.
• By introducing instant messaging, Truphone is recognizing the key role IM is taking on in IP-based conversations where a conversation may start over a chat session and migrate to a voice session if deemed appropriate.
• Truphone sees the introduction of these enhancements as a key to building the Truphone user community; Truphone generates revenue through offering low cost calling to/from the landline and mobile PSTN network.
• Truphone is looking at adding BlackBerry and Android to their supported platforms for this service over the next few months. Key here are devices that support an application store in order to make user access to these services simple and trivial.
• To avoid high roaming charges it is recommended that Truphone for iPhone be used either over a WiFi connection anywhere worldwide but only over a user’s home country 3G carrier.
• These new features go live on next Monday, January 12.

Some outstanding questions:

• Given that the Truphone application needs to be active for conversations, how will this work when other applications are open? Currently if I have Truphone as the open application on my iPhone, I can receive free Truphone calls and my presence will be indicated to other Truphone for iPhone users if I am in their “Favorites” tab. However, if I am in another iPhone application, I cannot receive “free” Truphone calls over WiFi; nor is my presence indicated to others. I look forward to seeing how the enhanced Truphone handles Instant Messaging when Truphone is not the “open” application on the iPhone. This is where BlackBerry’s full multi-tasking capability is a major advantage over the iPhone.
• Calling Skype contacts involves providing your SkypeID and password. What security is in place to maintain the confidentiality of this information. What other security aspects are compromised as a result of placing the calls via a connection to a gateway that supports the caller’s Skype client.
• What is Skype’s reaction to having Truphone siphon off what could otherwise potentially be SkypeOut revenues while leveraging the Skype user base and using the “free” aspect of Skype? We know Skype is working to launch mobile phone applications, probably this week at CES. With iSkoot and the Skypephone on 3′s networks, as we learned at last year’s eComm 2008 iSkoot presentation, a portion of carrier revenues are shared between Skype and iSkoot.

A major step forward in making low cost calls worldwide, Truphone’s moves once again emphasize that WiFi is becoming an ever growing alternative connection option to making wireless calls. At the same time it will be interesting to see how the business model plays out in a world where the cost of voice calling continues to move towards zero.

GigaOm: Truphone Brings Skype to iPhone and iPod Touch

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Having spent three days with Nokia personnel based in Finland, my need to make calls to Finland on my Skype Unlimited World subscription has just increased. And with all the technology development going on in Israel (for instance, iSkoot’s and Fring’s developers are based in Israel), Israel becomes another high demand country for inclusion in Skype’s various Unlimited subscription offers.

Today Skype announced the addition of Finland and Israel to their Unlimited subscription offerings. For instance they are now included at no additional charge to the various Skype Unlimited World, Unlimited Europe (20 countries with Finland as the only addition), etc. subscriptions. Finland and Israel are also included in the 36 countries for which you can obtain an Unlimited Country subscription. (Mexico remains a 37th country special case.)

Additionally, administrators of Skype Business Control Panels can now purchase Skype Unlimited subscriptions for any employees, business colleagues and others whose Skype activity they administer.

With the ongoing 10,000 minute per month fair usage cap, I guess I’ll have to reduce my time spent making calls to Chile and Estonia via SkypeOut. (10,000 minutes/month represents about five and a half hours/day.)

(Note: Links in this post will probably go to the pages for Canadian users; simply change your pages via the “change region” drop down box on the leading Skype subscription page for each region.)

Tags: Skype, Skype Unlimited, Finland, Israel, iSkoot, Fring, Skype Business Control Panel

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Use SkypeOut with Talkster to make SkypeOut calls to “Caller Pays” mobile phones at your “local” SkypeOut rates (= free, if on a Skype Unlimited plan).

A couple of weeks ago I reported on how North Americans can make calls on SkypeOut and send their mobile phone number as their SkypeOut callerID. This has had significant unanticipated implications for a couple of services that use your mobile callerID for immediate identification and access to their service.

iotum’s Free Conference Call: I noticed that, over the past couple of weeks since making my mobile number my SkypeOut CallerID, I did not have to enter the PIN codes supplied for each of the Squawk Box calls I register for. When I initially registered for Free Conference Call last fall I had to supply a mobile phone number with which I would associate my FCC account. If I called into a call from my mobile phone I was immediately identified using my mobile CallerID and put into the call. But since I usually called in via SkypeOut, where the callerID had been “000123446″ I had to enter a PIN code to access the call. However, now that SkypeOut sends my mobile callerID, I am immediately put into the Squawk Box call as if I called in from my mobile phone.

Then last week, speaking with Talkster CEO James Wanless, he pointed out that the availability of mobile phone numbers as the CallerID (CLI) for SkypeOut calls makes it feasible to make SkypeOut calls to mobile phones in “Caller Pays” countries at “local” wireless phone charges using Talkster’s Free World Dialing service.

Prior to discussing Talkster’s service, a reminder: for calls originating from any carrier or VoIP service, the charges for calling mobile phones in “Caller Pays” countries are approximately an order of magnitude higher than charges to landlines in these countries. Basically call termination rates are established by the various mobile carriers in these countries; the originating carrier or service has little control over this differential. For this reason Skype’s various Unlimited plans do not include calls to mobile phones in “Carrier Pays” countries; the same general principal applies to calls from, say, Truphone or other VoIP-based services. Skype’s Unlimited plans, where relevant, will include calls to mobile phones in U.S./Canada since it is the mobile phone owner who pays for the mobile connection.

Here’s how Talkster’s Free World Dialing to Skype works:

1. First ensure you have set your Skype CallerID¹ to be your mobile number, preferably, but not necessarily, a mobile number you have entered into your Skype profile.
2. Talkster asks you to create individual “pairings” with each friend’s mobile phone number in the remote country.
3. You “register” your mobile phone number and your friend’s mobile phone number in, say, Germany or U.K. as a pairing.
4. Talkster then gives you “local” phone numbers for this pairing — for instance I get a “416″ or “647″ Toronto number; I am also given a “local” German or U.K. number for my German or U.K. friend to use.
5. SMS messages containing these numbers are sent to both yourself and to your friend. On my Blackberry there was an opportunity to add the phone number to my address book.
6. I then use SkypeOut to call the “416″ or “647″ number in Toronto; Talkster detects my mobile callerID at this number and automatically calls my German or U.K. friend on his/her mobile phone.
7. We then have ten seconds to confirm we want to talk; I stay on the connection. There is no charge for this confirmation step.
8. My German or U.K. friend hangs up and then dials back to his/her assigned “local” German or U.K. number and is immediately connected back into my initial call.

And the resulting costs:

• Wireless carrier charges: Each of us is paying “local” wireless calling rates (i.e. I use up “local” minutes from my monthly Rogers subscription, and my remote friend pays according to his/her mobile subscription arrangements for local calls in his/her country) for the wireless connection at each end.
• The call originator pays whatever SkypeOut rates apply for to the “local” Talkster number. Since I am on a Skype Unlimited plan there is no charge for calling the “416″ or “647″ number assigned to me by Talkster.

The end result is that nobody is paying those high “Caller Pays” rates for calls to a German or U.K. mobile phone (~ US$0.25 per minute according to Skype’s rate schedule). It is not a traditional “Call Back” service in that I never hang up but rather stay on the connection while awaiting a call back from my remote friend to initiate the call. Effectively I am given a Toronto number for connecting to my friend in Germany or U.K.

Using SkypeOut with a Skype Unlimited plan for local access, Talkster’s Free World Dialing now makes calls to mobile phones in “Caller Pays” countries at no additional cost, provided my remote friends are willing to make a “local” call back into the call.

Talkster is different from the Skype To Go service in that, on Skype To Go, the caller is still be paying those “Caller Pays” charges on a call to a “Caller Pays” mobile phone service and you may end up paying a connection fee. On the other hand the called party does not have to make a call back. (Not being in a Skype To Go country, I have not experienced this service but James understood the algorithm.). Whereas Skype To Go works in eleven countries, Talkster is available for 34 countries.

A few comments from my interview with James:

• The setup connection call becomes a form of presence indication in that the called party needs to answer to indicate that s/he can participate in a call.
• They do not use SMS for notification of a call since SMS delivery does not have sufficient reliability to send a message in a timely manner; also SMS does not necessarily indicate that the called party is available to take a call.
• An individual can set up separate pairings for each remote contact whom you call frequently. Talkster allows up to 15 pairings for Canadians, 20 pairings for U.S. users. However, their experience is that most users will only set up a maximum of five or six pairings. Pairings can be between numbers in 34 countries.
• With this calling algorithm, it’s a “Friends and Family” service for your frequently called numbers but not one for generally making calls to these countries.
• While this service is driven by the cost saving for calls to mobile phones, it can also be used to make calls to remote landline phones in the available countries.
• Talkster is developing business relationships with online communities as a key target market where they would have access to (user permitted) demographics to target advertising more effectively. James has commented on this aspect in his recent post “Using the Social Graph for Targeting Ads“. Rather than being “just another call back service”, Talkster expects to monetize through advertising during the ten second period when making the initial setup call. They may also have a means to send out coupons via SMS.
• There are no termination charges associated with this algorithm.
• According to James, because there are two inbound calls connected, apparently this enhances the call quality. Confirmation would only come through experience.
• Whereas Skype Unlimited Mexico provides unlimited calling to three cities in Mexico (with significant discounts to other regions), Talkster recently announced free calling to 14 regions of Mexico.

A classic example where this lower cost service became available to Skype users simply by Skype’s making CallerID available; there was no additional work required by either Skype or Talkster to make the service work.

Skype CallerID will only accept mobile phone numbers or your SkypeIn (online) number.

Tags: Talkster, Skype, Free World Dialing, Skype To Go, Skype Unlimited, iotum, Free Conference Call, Skype callerID, SkypeOut

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Yesterday’s announcement of new international calling plans available from Skype probably set a record for generating press traffic about Skype. Certainly my “:Skype” keyword feed in FeedDemon has been gone off the end. Most of the reports were simply rehashes of the original two press releases (Global and North America). But some bloggers’ observations are worth mentioning.

Pat Phelan at Cubic Telecomm (MaxRoam) thinks these plans will seriously impact the phone card market:

This a serious blow to the phone card market and with the multicountry plans to launch prepaid Skype cards now starting to ramp up this could spell the end. ….

These packages are certainly going to make me re-examine my Skype usage, couple this with the excellent quality I have been getting on my 3Skypephone lately and its time thr a package change on my Vodafone corporate account

Mark Evans thinks the sexier story is Skype’s growth:

There’s lots of excitement today about Skype unveiling a new plan offering unlimited long-distance calls to 34 countries but the far more interesting story – at least from this corner’s perspective – is Skype’s strong growth, which has been chronically unreported.

Andy Abramson, at VoIP Watch gives his take:

1. Revenue can become more predictable as it will be charged monthly. Unlike the Skype Unlimited plan which was a one time purchase, this allows users to change plans and also drop or add it as they need it. That means students and vacationers are ideal targets.

2. The charges can be to PayPal or any credit card. This opens up the universe of potential users to non-PayPal users.

3. The plan is changeable between hemispheres so if you buy one in say the USA and end up in Europe working, in school or on vacation the Skype users can swap out as needed.

While I know road warrior and world traveler Andy immediately signed up for a World plan, PhoneBoy’s selection is more typical of North Americans with no overseas family ties:

This certainly makes it easier for people to justify giving Skype more per-month. If I made a couple of calls to Mexico or to the countries that are supported, I would certainly do it. However, I find the current Skype Pro offering–and the Skype Unlimited U.S./Canada plan–suffciient for my needs.

Dan York, who gets a bird’s eye view of the telecomm world from his work with Voxeo sees it, for the U.S. market, as a step up from “unlimited” domestic calling plans in the U.S. He also comments on telcos’ use of the term “unlimited” (to really mean “lots and lots” but “enough is enough”):

Of course, I had to laugh at Skype joining into the game played by all the major carriers here in NA known as “redefining the word ‘unlimited’”. Several of the carriers here in the USA and also in Canada have at various times trumpeted their “unlimited” data plans… which of course were “unlimited” only according to the carrier’s definition of unlimited… really something more like:

“Unlimited” = “unlimited calling up to a certain point that our finance folks have determined you start to impact our profit”

My thoughts on that issue: if you’re using that many minutes (over five hours of calling per day)

• it’s only fair, and does not hurt, to pay for excessive use if you’re running a (revenue generating) business
• figure out a way to get your contact onto Skype.
• get a life!

Certainly these plans could have a major impact in the Canadian market where we have many families with roots in the overseas countries serviced by the World plans. From my own anecdotal contacts, Skype attracts two major demographics in Canada: (i) family calling back to the “home country” overseas and (ii) small businesses wanting to grow worldwide. Unfortunately Skype’s “World” plans do not cover India, Pakistan and the Philippines where many Canadians have strong family ties. (I’m especially surprised by the lack of India since we know Skype has termination arrangements for both Canada and India through VSNL.).

The consensus in this morning’s Squawk Box call (recording link to follow when available) was that these plans are evolutionary while setting new pricing benchmarks for flat rate calling. It’s more a matter of working out the various terminating carrier agreements as opposed to any major new technology developments. And the biggest challenge is making access to Skype calling easier for the consumer through increased distribution of dedicated Skype-enabled hardware platforms with the familiar telephone touchtone interface in various markets – but especially in Canada and the U.S.

Tags: Skype, Pat Phelan, Mark Evans, MaxRoam, Andy Abramson, VoIP Watch, Dan York, PhoneBoy, VSNL, Skype Calling Plans, Squawk Box

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