Last week Skype and TELUS Mobility announced an agreement, where Canada’s third largest national wireless carrier will be closely working with Skype for free Skype-to-Skype and low cost SkypeOut international calling. While Canadians can use Skype for iPhone and Skype for Android on any Canadian carrier offering iPhone and Android phones, this agreement represents the first formal agreement between Skype and a Canadian wireless carrier with value-added services.

To give some background, both TELUS Mobility and Bell Mobility were spinoffs of legacy landline carriers where TELUS covers British Columbia and Alberta while Bell covers Ontario and Quebec. Since their respective cellular networks commenced operations back in the mid-1980’s , both have expanded to cover the entire county for wireless services; in TELUS’ case they acquired a major Bell/Rogers competitor who covered Ontario and Quebec.

However, whereas Rogers, the leading national carrier has always supported GSM protocols, TELUS and Bell both launched their services using the CDMA protocols (a la Verizon and Sprint in the U.S.). The 2010 Vancouver Winter Olympics, where Bell Canada was the “official carrier”, was the stimulus for Bell Canada to upgrade their network to GSM-compatible HSPA+ service in November 2009.

But this is a large country, 90% of the Canadian population lives within 160 kilometers (100 miles) of the 6,000 km (4,000 mile) U.S.-Canada border. So the capital cost for a new network infrastructure, so long yet so narrow, runs up quickly. As a result Bell Mobility and TELUS Mobility partnered to build one 4G/HSPA+ network infrastructure to support the two retail operations. One ironic twist is that, at the time of the network’s launch in the fall of 2009, Bell and TELUS both launched an offering for the iPhone 3G S (and later iPhone 4) which already had support for HSPA+.

Launch of this network broke not only the Rogers Canadian monopoly on the Canadian iPhone franchise but also its monopoly on international roaming for visitors to Canada (since most of the world’s carriers supported GSM). There also occurred some legal and regulatory battles (Bell/TELUS vs Rogers) over the promotion of each network’s speed ; effectively they ended up in a draw. (Note also that Canada’s two legacy CDMA carriers were offering iPhone a year before Verizon could launch a CDMA-compliant iPhone in the U.S. market.)

From its launch in late 2009, TELUS has called their network a 4G 21Mbps network, with a speed increase to 42Mbps this year and plans to go to 4G/LTE “coming soon”. So they certainly have the data speeds required to support Skype calls over a data network using a native carrier-agnostic Skype client.

Under the leadership of CEO Darren Entwistle TELUS has been noted for aggressive, “outside-the-box” marketing initiatives that appeal especially to a younger demographic . The most recent example occurred earlier this week when, following release of a OECD report pointing out that Canadian carriers had some of the highest international roaming charges anywhere, TELUS came back immediately announcing they would be reviewing their roaming plans with a view to lowering roaming costs.

Upon reviewing the Skype/TELUS press release, along with responses to some questions I posed to Skype’s PR agency, here is how I see the positioning of the service:

• TELUS customers will be using Skype for iPhone and Skype for Android installed on the relevant devices via downloads from the respective application stores or via the web at skype.com/m.
• TELUS will be reinforcing the customer experience by providing enhanced customer support for TELUS customers using Skype on their smartphones
• Skype Credit can be purchased directly from the TELUS customer’s mobile phone with the transaction billed to his/her TELUS account
• A Skype edition LG Optimus Black phone will be launched in July by TELUS to give customers easy access to Skype through a pre-installed icon on the home screen, a detailed “getting started” guide, and Skype Credit to begin making calls to landline and mobile phones immediately
• TELUS customers will be able to make free Skype-to-Skype calls worldwide as well as use Skype’s Instant Messaging presence and chat features.
• TELUS  customers will be able to make calls to landlines outside Canada (and mobile phones in countries where phone owner pays for inbound calls) using either Skype Calling Plan subscriptions or Skype Credit on a pay-as-you-go basis.
• Carrier data charges will apply when used over the 4 G network. TELUS recommends a Data Flex plan or Wi-Fi connection when making Skype calls (according to the TELUS website)
• The Android-based LG phone will support Bluetooth connectivity (not available with Skype for iPhone currently)

Here’s my take on the announcement:

• This is Skype’s first carrier arrangement involving carrier-endorsed support of the native Skype client on a mobile smartphone as compared to the carrier-specific “Skype mobile” arrangements with Verizon and 3.
• It’s a major marketing move by TELUS to associate itself with leading edge services without the need for any major capital equipment costs (such as “Skype mobile” gateway servers) other than those already planned for their 4G evolution.
  • There are ongoing operations costs for TELUS involving marketing and customer support.
  • Skype does not have to develop a carrier-specific application for these services
• Skype’s significant data requirements will drive demand for TELUS data plan subscriptions and ARPU when the customer is making calls, including Skype-to-Skype calls, from within Canada.
• For the supported smartphones Skype basically takes over TELUS’s responsibility for managing TELUS Mobility’s international calling with Skype revenues coming from Skype Calling Plan subscriptions and Skype Credits required to make international calls to the PSTN.
• One would have to assume the above two revenue drivers would incorporate revenue sharing between TELUS and Skype.
  • Question: are there any Skype software royalties involved based on customer revenues?
• Will the LG Skypephone support Skype mobile Video that was announced for Verizon at CES 2011 or an equivalent service?
• When roaming internationally, it would be wise to turn off 3G/4G and only make Skype calls from WiFi connections in hotels, airports, restaurants, offices and other WiFi hotspots – which are quite prevalent in Europe from my own experience over the past two years.
  • Is WiFi growing as a Stealth Carrier? Can it be a viable alternative to roaming charges?
• Skype-to-Skype messaging will certainly impact TELUS revenues for SMS text messaging services but Apple’s recent iMessage announcement will probably have an even larger impact on carrier SMS messaging revenues
• With no native Skype for BlackBerry application, TELUS’s Skype service will not be available to their BlackBerry customers.

One final but very important concern: will the supported phones have enough battery life to support this initiative? I have covered this issue previously with some suggestions.

And one irony: While there are no Canadian Skype Online numbers available due to a conflict between a regulatory issue and Skype’s past policies re e911 services, TELUS Mobility customers can now set up as many as ten Skype Online numbers in any of the 26 countries (U.S., U.K. included) where Skype Online numbers are available. Calling a “local” Skype Online number in those countries, an “expat” relative or overseas customer can reach a TELUS Mobility customer via Skype on a call that would have no termination charge revenue for TELUS.

Bottom line: Skype is once again being endorsed for its ability to be a marketing tool that attracts a younger “always-on” demographic seeking lower cost communications and new communications services. Skype is a service that has a low implementation cost for TELUS while taking advantage of their higher speed network, yet expands TELUS’s appeal to a country where international communications plays a significant role not only for business but also for the various ethnic communities that want to keep in touch with relatives and friends in their country of ethnic origin.

We look forward to following its actual implementation, especially the launch of the LG Skypephone and its feature set, over the next couple of months.

Following up on Tuesday’s announcement, where many questioned the valuation placed on Skype by Microsoft, Ben Horowitz of Andreeson Horowitz, one of Skype’s investors in the “Silver Lake round” a year ago November, provides some interesting insight into what Andreeson Horotwitz had seen when they made that initial investment 18 months ago. And these insights provides additional background as to why Microsoft saw an $8.5B acquisition as appropriate.

And, having been involved with or witnessed from behind the scenes a few acquisitions in the past, it provides insight into assessments of acquisitions that journalists simply don’t seem to appreciate. It’s too easy to write that story about how an investment will fail.

Key points:

• Prior to the Silver Lake Round, there were intellectual property issues that, on the surface, made it appear that the company was impossible to buy.
• There was scepticism that Skype could not migrate from solely having Skype clients to the mobile and web client world while maintaining its ease-of-use.
• But the investors recognized that both Skype’s founders and employees were a unique resource:
  

  With a company as complex as Skype, investors draw different conclusions about the same facts. In this case we had the same data as everybody else, but we had a radically higher opinion of Skype’s founders and employees than the doubters and naysayers. We believed that we could work with, rather than against, the founders. And we believed that Skype’s amazing engineering team, led by the original Eastern European software wizards who created the service, could compete and win against anybody.

  We specifically thought that Niklas and Janus, two of the preeminent technology entrepreneurs of our time, wanted Skype to be a huge success and would do everything in their power to make that happen. As a result, we did not think the doomsday scenario that greatly concerned other investors—that the founders would attempt to shut down the company through the courts—was an actual possibility. Based on the founders’ motivations, we felt that we’d quickly settle the IP litigation. Both sides wanted to get on with the business of making Skype more competitive and could not afford to waste time bickering about IP ownership.

  We couldn’t have been more right about that. After quickly settling the litigation, both founders immediately made major contributions to the business through their energy, insight, and intellectual prowess.  And boy did we need them to do that, because we soon faced full frontal assaults from the both Google and Apple.

• They recognized that Skype’s founders were approachable and basically wanted to see Skype succeed.
• Working out a settlement to the intellectual property litigation, they brought the founders into the investors as a resource that could make “major contributions to the business through their energy, insight, and intellectual prowess.”
• The result of the Silver Lake round was increasing growth of the Skype user base (going from about 300,000 new accounts per day to over 500,000), Skye usage (supporting almost 25% of international calling minutes) and, at peak times, over 30 million concurrent users.
• In his summary paragraph Ben sums up how the combination of passionate employees, innovation and Skype’s powerful network effect overcame any competitive attacks, even from a respected player such as Google.
  

  In retrospect, it was easy for people to underestimate the quality of the Skype engineering team and the power of Skype’s network effect. When we bought the company from eBay, many thought that Skype, like so many acquired technology companies, had lost its technical talent. Through our research, we found that Skype had a core group of engineers who were completely dedicated to the mission. They stayed through the eBay acquisition and were hugely determined to make Skype the communications company of the future. Over the past decade, this team consistently introduced ground-breaking technologies ranging from highly resilient and scalable peer-to-peer networking to radically higher sound quality through dramatically superior codecs. In doing so, Skype out-innovated the competition in the most important areas. When combined with its powerful network effect—how valuable is a video calling service if there is nobody to call?—Skype became a formidable competitor. [Editor’s bold]

Bottom line: My long time acquaintance Rick Segal used to talk about looking first at the people before even looking into the technology when considering investments. Over my many years of meeting Skype employees I have consistently found, in spite of an oft-times critical public,  an underlying enthusiasm and passion that says they are on a mission and want to complete that mission.

Now they get to play out that mission under the guidance of a technology business that established many of the business processes for combining marketing, product management, engineering and financial resources into successes. Microsoft has the opportunity to add proven real-time communications services into their existing product line. Skype, as an autonomous business unit within Microsoft, can finally overcome many of  its inhibitors to success and expand significantly on the founders’ initial vision.

Related articles

• The End of the “Skype as Bandit” Era (disruptivetelephony.com)
• Skype’s Real P2P Network (gigaom.com)
• More Skype Rumors: Big News Soon, Microsoft In The Mix (gigaom.com)

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)

The opening day of CES 2011 was a banner day for Skype announcements and activity. It started with a morning press conference where new Skype CEO Tony Bates built his message around the themes of “Universal, Useful. Wonderful”:

He covered recent Skype activity and accomplishments:

• From the recent Skype outage, they learned much about Skype’s pervasiveness and users’ reliance on Skype as a critical real time communications service in addition to addressing the technical issues that led to the outage.
• In its annual report on international long distance minutes by service provider, Telegeography had reported earlier in the day that, in 2010, Skype had increased its market share of international calling minutes from 12% in 2009 to 24.7% in 2010. This represents an average of 520 million minutes per day and over 190 billion minutes for the year.
• Video calling has increased to 40% of all calls in 2010.
• When Skype for iPhone 3.0 launched last week, it triggered over 4 million downloads on the Apple app store and over 1 million Skype mobile video calls on the first day.

Tony then went on to make some announcements:

• Completion of an agreement earlier in the day to acquire Qik, a popular live video streaming service, to complement its video technology resources; from Tony’s blog post linked above:
  

  Skype and Qik share a common purpose of enriching communications with video, and the acquisition of Qik will help to accelerate our leadership in video by adding recording, sharing and storing capabilities to our product portfolio.

  Through this acquisition, we’ll also be able to take advantage of the engineering expertise that is behind Qik’s Smart Streaming technology, which optimizes video transmission over wireless networks.

• Launch of Group Calling on Skype. Group calling on Skype for Windows 5.1 has gone “Gold”. It’s being offered as part of a Skype Premium offering that includes Live Chat Support for a monthly $8.99 subscription fee (with discounts for 3 and 12 month subscriptions). While group video calling supports up to ten participants on a call, only the call host requires a subscription.
• More Skype access from the living room involving Skype for TV becoming available later this year on newly introduced Skype-enabled Sony BRAVIA and VIZIO VIA TV’s; Skype has also announced a partnership with Panasonic and Sony to introduce Skype-enabled Blu-ray Players in the near future.
• Opening up SkypeKit beta to any legitimate developer for building third party applications embedding Skype.

Early Thursday afternoon Skype CEO Tony Bates appeared at the Verizon 4GLTE press conference to announce Skype mobile Video that will be appearing within the main feature set of four Android smartphones that will be amongst the initial featured devices supporting Verizon’s new 4G/LTE network. Whereas the current Skype mobile on Verizon uses Skype’s thin-client architecture, the Skype mobile Video will use a true Skype IP client.

For the first time in several years, Skype has a small booth at the rear of the Upper South Hall featuring video calling on iPhones as well as group video calling. But it’s been drawing crowds for the presentations.

Bottom line: speculation can abound as to what new services the Qik acquisition will bring and how they can complement existing Skype services. While the Skype’s user base continues to grow, usage has accelerated significantly when it comes to Skype’s key feature: free international calling. The introduction of a Skype Premium service  with a fee encompassing group video calling and live chat support adds the first potentially significant new revenue stream since the launch of Skype Out and Skype Online numbers many years ago. (Coincidental that it comes at the time of filings for a new IPO?)

Note that coincidental with the Group Video calling announcement Skype released Skype for Windows 5.1 that also address a couple of related issues.

Here’s the full morning press conference video:

Related articles

• TNW Interview with Skype at CES: The next generation of video and why the Kinect is so cool (thenextweb.com)
• Skype Buys Qik Mobile Video Streaming Service (pcworld.com)
• Skype Soon To Be On Sony BRAVIA and VIZIO VIA TVs (socialtimes.com)
• Skype buys Qik mobile video streaming service (macworld.com)
• WATCH: Skype To Acquire Qik (huffingtonpost.com)
• At CES, Skype gets serious about video with Qik buyout (e27.sg)

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.)

Since the initial announcement of Skype for SIP a year ago today, with the goal of integrating some elements of Skype’s infrastructure into legacy PBX systems that support SIP, Skype has been expanding its partner base as well as incorporating its deployment into the Skype for Business program.

To repeat: the purpose and goals of Skype for SIP are:

• to allow small-to-medium businesses to reduce their international calling cost to over 180 countries through use of Skype Out business subscriptions (without the need to negotiate and manage country-specific contracts with the telcos in each country)
• to provide a free, optionally international, click-to-call inbound calling capability through Skype Online numbers
• to allow integration of these elements of Skype into legacy PBX systems that support SIP

Recalling that Skype for SIP is still at a public open beta stage, Skype participated in four announcements yesterday that expand this ecosystem and the open beta activity with a “third party” Skype for SIP certification partner and three new PBX Gateway partners:

• Skype Selects tekVizion Labs to Manage Skype for SIP Interoperability Certification Program

tekVizion Labs has been introduced to the Skype partner community as the interoperability experts to help expedite Skype for SIP interoperability testing and certification. In addition to Skype for SIP interoperability testing, tekVizion Labs can provide consulting, integration and support services to Skype’s customers and partners and the systems integrators and value added resellers they work with.

• Grandstream Achieves Skype for SIP Interoperability Certification

Interoperability with Skype for SIP gives SMBs the ability to receive inbound calls through their Grandstream GXE IP PBX or related gateways from more than 521 million registered Skype users around the world at no additional cost to the Skype user when calling through Skype. Businesses can leverage the investment in their corporate website even further by enabling Skype users to simply click on a global click-to-call button on the website to place immediate calls to sales or support via Skype. Skype calls received through the Grandstream IP PBX are handled by the PBX in the same way as other inbound calls. For outbound calling, Grandstream customers can realize significant cost savings to landlines and mobile phones around the world using Skype’s low-cost calling rates.

• Skype for SIP now Interoperable with AudioCodes Mediant 1000 Multi-Service Business Gateways

By certifying the AudioCodes Multi-Service Business Gateways with Skype for SIP, customers can benefit from interoperability with hundreds of TDM PBXs, Key Systems, and IP-PBXs that have not been able to connect to Skype so far. In addition, if a company buys and associates an online Skype number with their AudioCodes Mediant 1000 Multi-Service Business Gateway solution, it can then receive inbound calls via Skype from business contacts and customers calling from landline and mobile phones.

• VoSKY’s New PBX Gateway Is [Amongst] Industry’s First to Achieve Skype for SIP Certification

The VoSKY SSG is available in two versions, supporting either 4 or 8 channels. It offers seamless integration with Skype for SIP Open Beta with any analog PBX or key system, connecting via a conventional (FXS) analog port. It allows businesses to take advantage of Skype’s cost savings and enhanced business features without restructuring their existing communications network and infrastructure.

As a result the Skype for SIP ecosystem grows beyond the initial partnerships announced with Shoretel, SIP Foundry and Cisco. Skype for SIP Certification ensures that Skype’s partners meet established standards not only for the technology behind the implicit interoperability required but also the user experience. And these partnerships allow Skype to leverage each vendor’s existing customer base to build awareness and revenues while disintermediating and disrupting legacy long distance business models.

Bottom line: With all the various Skype for Business activities coming this year, including the launch later this spring of the FREETALK Connect PBX incorporating both Skype for SIP and Skype for Asterisk (which also supports free Skype-to-Skype calling), small-to-medium businesses will have several options to both lower their communications cost, have customer calls directed to appropriate employees and/or end points, and expand their markets through low cost communications to new international markets.

Link to a list of all Voice On The Web posts discussing Skype for SIP.

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.

Related articles by Zemanta

• Grandstream Achieves Skype for SIP Interoperability Certification (eon.businesswire.com)
• Skype for SIP Now Interoperable with AudioCodes Mediant 1000 Multi-Service Business Gateways (eon.businesswire.com)
• Barriers to using Skype for business fall away (infoworld.com)
• FREETALK Connect, the worlds first Skype-enabled Unified Communications system. (saunderslog.com)
• Skype for SIP could save businesses big bucks (thenextweb.com)
• Skype Security: Is It Safe for Business? (computerworld.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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Full disclosure: This post was prepared prior to today’s press conference using information that was publicly available prior to the conference. In the second post I’ll discuss the service as announced at CES today.

When you can advertise “Free phone calling internationally”, they will come! In the CES interview with Skype CEO Josh Silverman, Josh makes the point about how Skype draws in customers by offering a free service that is easily adopted by consumers and then offering “premium” services, such as SkypeOut calling, to generate revenues. This model has led to:

• over 580MM registered Skype accounts (probably 100MM are currently active)
• over 12% of international long distance calling minutes are Skype-to-Skype calls
• and revenues approaching $1B per year.

As mentioned in the recent CES interview with Russ Shaw, Skype’s VP & GM for Mobile and EMEA, Skype’s partnership with Hutcheson Whampoa’s 3 service in nine countries has delivered interesting carrier-friendly results from 3’s customers who take advantage of its free Skype-to-Skype calling:

• 20% higher margin
• 17% additional traditional voice minutes
• lower churn rate
• high ARPU (average revenue per user)
• over 1 billion Skype-to-Skype minutes delivered in the UK since Nov. 2007

Results that should get all wireless carriers’ attention! And Russ did emphasize these results to reinforce where some of Skype for Mobile’s current activities and resources are being directed.

Setting the stage in the U.S. market for today’s Skype-Verizon announcement:

• Verizon has a reputation as offering the best high speed (3G and faster) wireless data services within the U.S. and nobody’s complaining about their voice quality.
• AT&T’s major strength appears to be its iPhone arrangements
• AT&T’s network performance issues, especially with their data service, are well documented (even their voice channel failed me on my last two trips to the U.S.)
• The major failing of the iPhone that impacts Skype for iPhone is its lack of multi-tasking capability
• Skype has announced they will be making available Skype for iPhone running over 3G – a service that will only be available on AT&T for the duration of the current Apple-AT&T agreement
• Verizon needs an offering and drawing card that will compete with AT&T’s forthcoming ability to offer a Skype-based service on the iPhone.

So it should come as no surprise that Verizon is announcing an agreement to offer Skype on several devices including the BlackBerry line and the Android phones they support.

The Service Architecture

Based on information that has come out over the weekend and content archived on this weblog, this service is modeled on an architecture similar to the iSkoot architecture used for 3’s service whereby data (Skype chat messages, presence and call signaling information) go over Verizon’s data channel but the actual voice calls are connected to the phone via Verizon’s (robust and readily scalable) voice channel. As a result:

• Call quality is limited by the (3.7KHz) audio bandwidth of the voice channel (in particular, no SILK superwideband quality calls)
• Verizon has no termination charges for calls to Skype contacts (or what amounts to being a Skype-to-Skype call – a key factor in making this service cost effective from the Verizon perspective)
• There is no loading of Verizon’s wireless data network (and the associated backhaul demands) with the heavy demand that would be placed on it via a true VoIP client.
• The resulting “Skype for Verizon” Skype Lite client on the BlackBerry and Android devices  has no support of calls via WiFi access points.

So the Verizon-Skype announcement certainly builds on previous Skype technology and business model experience; it will take advantage of proven and demonstrably reliable carrier voice and data services. I’ll have more in the follow-up post covering the actual announcement.

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Since its launch about two years ago, I have blogged several times about iotum’s CalliFlower Conference Calling service. More significantly I have used it for several conference calls of up to 25 people, including a couple that ran for over two hours. While permitting up to several hundred participants into a conference call, Calliflower’s primary unique feature is the “portal” created for each call along with the long term archiving of a call and its associated “portal”. Other features include:

• access via the PSTN in over 100 cities in 30 countries (using phone numbers supplied by Voxbone)
• ability to display (and share) documents supporting the conference call’s agenda
• a common chat window, often used to share URL’s, provide information complementary to the primary discussion or even ensure all participants have correct spellings of key words used in the discussion
• a complete service that supports the entire conference call process from initial invitations to the final archiving of the call
• an iPhone client for setting up and accessing a CalliFlower session
• sessions can be either private requiring invitations or public; the archived content of public sessions is searchable

Today iotum has announced the addition of Skype as a way to access Calliflower conference calls; from the press release:

Previously, participants could only dial into Calliflower conferences through PSTN access numbers, potentially incurring local charges.  In regions or countries where no such access numbers are available, customers would incur long-distance and even international charges, or use up Skype-out minutes calling access numbers overseas.  Now callers can access Calliflower through a Skype ID – CalliflowerSkype – or via a web button in the Calliflower UI, overcoming this disadvantage.

“We’ve had many requests from potential Calliflower customers who had no local access numbers, especially from  parts of Africa, India, China and the Middle East,” said Alec Saunders, iotum CEO. “Now, as long as they have Skype, that doesn’t matter anymore.”

In addition, users gain from the better audio quality they will enjoy through direct Skype access¹, as well as from all the visual information, documents and presentations that are shared through Calliflower’s interactive dashboard. These tools go a long way toward improving understanding on international conference calls.

Available on PC, Mac and iPhone, Calliflower makes organizing and participating in multi-party calls simple and engaging.  It allows participants to see the status of other callers and raise hands to request the floor, while also providing interactive chat, document sharing, intuitive conference controls, call recording, invitations and reminders, integration with calendars, and more.

On your initial access to a CalliFlower call you will need to add CalliFlowerSkype as a Skype Contact. But then recall that Skype allows you the option of using your Skype Online number or a designated mobile phone number as your caller ID for SkypeOut calls. When accessing a CalliFlower conference call on Skype, CalliFlower will look at your callerID in place of entering a PIN number to provide authentication for your access. iotum is looking at adding the ability to use your SkypeID as a participant identifier.

As with access in over 30 countries via the PSTN, Skype Access in CalliFlower is included in the monthly Premium service with a monthly charge of $50 for the first two moderators or organizers within a company and $25 per additional organizer.

Bottom line: Skype Access opens up lower cost access for participation in a CalliFlower conference call in every country where Skype is available. Incorporation of Skype access also fits into Skype’s “Skype Everywhere” goal. In this case calls can be accessed not only via Skype on a PC but also from any Skype offering on a mobile platform. This is enhanced for iPhone users where they will also find an iPhone client for setting up and managing a CalliFlower conference call.

¹I asked iotum CEO Alec Saunders to clarify the statement re improved auido quality; his response:

1. Better quality hardware. Skype users tend to be using better quality equipment than POTS callers.  In particular most PC headsets have a better microphone than the cheap microphones in telephone handsets.
2. 2. Fewer transcoding losses. Internally, Calliflower is VoIP.  When a user calls Calliflower from the PSTN, those calls transit a media gateway where the media is transcoded and presented as G.711.  Prior to the direct connection we’ve initiated, media coming from Skype would be transcoded at least twice – from Skype to the PSTN, and then PSTN to G.711.  The result was a noticeable degradation in quality.  Now Skype presents the media to us directly as G.711.

Other posts:

Check out Tom Keating’s post over at his VoIP and Gadgets blog on TMCNet where he interviews iotum CEO Alec Saunders about how CalliFlower implemented its Skype access via Skype for SIP, involving Skype for SIP’s addition of IP address authentication.

Full disclosure: the author has followed the evolution of CalliFlower over its three year development process, and was a frequent participant in iotum’s SquawkBox calls where not only did we discuss technology news of the day but also contributed ideas and suggestions for improvements and enhancements to the CalliFlower service. You can access the archive of the SquawkBox call discussing the FREETALK Everyman headset at the time of its launch here.

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Early today Skype released Skype for iPhone 1.3, available as an update in the Apple App Store.

Two key new features:

Landscape Mode for Skype IM:	Call Quality Indicator

The Call Quality Indicator builds on the experience gained with the call quality indicator in Skype for Windows 4.2 beta – a tool I have found most useful in sorting out call quality issues.

Check out Skype’s Peter Parkes post where he also discusses what the roadblock is for “Calling over 3G” as well as progress with incorporating push notification. C’mon Apple – it’s time to allow Calling over 3G: AT&T says Yes, Rogers does not have an issue. What’s the hold-up (iPhone 4?)? Maybe it’s a hardware performance issue?

The first thing I noticed after downloading the update was that the application appears to operate much more “snappily” in that wait times for chat sessions to appear or even to recognize you are Online appear to be much shorter. But I need more usage experience to confirm this perception further.

With the proliferation of WiFi access points in hotels, conference sites, offices, restaurants, airports and other public places, Skype for iPhone has become a very useful calling option for me with the extensive traveling I have been doing recently. And tomorrow I will put up a post about how I use Skype for iPhone to call my BlackBerry. Eh?

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Skype launches an Open Beta phase for its Skype for SIP service. Over 10,000 businesses worldwide have lined up to join the program.

Over the past eight months, Skype has been running a closed Skype for SIP beta program. A couple of PBX vendor agreements have been signed while Skype personnel have been having discussions with potential Skype for Business customers about their use of business communications processes.

Yetersday Skype has announced the launch of the Skype for SIP Open Beta program. According to Skype’s press release nearly ten thousand businesses around the world have applied to participate in this open beta phase. However, this phase is also open to any new applicants, whether PBX manufacturers, SIP gateway vendors or individual enterprises, who want to learn how they can take advantage of Skype for SIP in their business communications.

And why the interest? Skype for SIP:

• allows a business to provide inbound calling from a Skype client (whether on a PC or embedded in devices such as the RTX 3088 Dualphone), web-based click-to-call buttons or a Skype Online number through a SIP-enabled PBX or Unified Communications system.
• provisions outbound calling to landlines and mobile phones worldwide at SkypeOut rates
• has a monthly fee of $6.95/€4.95 per month per concurrent voice channel (which can handle either inbound or outbound calls)
• is managed from the Skype Business Control Panel:
  • to create and manage employees’ or outsourced resources’ Skype accounts
  • to subscribe to Skype Online numbers
  • to allocate SkypeOut credits to employees’ Skype accounts
• allows management of Skype calls via the existing PBX or UC features, such as call routing, conferencing, phone menus and voice mail
• can bring significant communication cost savings to enterprises, whether large, medium or small, especially if they are addressing continental or worldwide markets

From the Skype press release:

A company’s IT administrator just creates and registers a Skype Business Control Panel (BCP) for the organization and then follows the instructions to configure Skype for SIP to work with its existing SIP-enabled communications system. This Web-based tool allows a company to control its Skype usage from a single point and enables centralized billing, easy allocation of Skype Credit, subscriptions and online numbers to users, as well as reporting about both usage and spending. Furthermore, it gives companies the ability to manage internal employee accounts, including who uses Skype and who doesn’t and what features they can use.

As an example of the cost savings, Enterprise Business Development Manager Matthew Jordan described a company who would replace a T1 line with 23 lines at a cost of, say, $400 per month plus per minute toll charges, at up to,say, $0.03/minute, for both inbound and outbound calls. With Skype for SIP, the company would be looking at a cost of $161 per month for the 23 voice channels plus low SkypeOut rates for outbound calls to landlines and mobile phones anywhere worldwide and no charges for inbound calls.

From Skype’s perspective, a primary goal of this beta phase is to monitor usage to determine experience-based usage patterns. To facilitate this goal,  during this open beta Skype for SIP will have a 20% burstage allowances such that a company with 10 channels can actually use up to 12 channels as a means to optimize bursting levels required  based on real calling patterns. With over 10,000 Skype for SIP customers, they hope to gain statistically significant data as well as learn more about scalability and robustness issues.

The entire systems is designed to be global and scalable as numbers build. The required SIP gateways (at sip.skype.com) will be independent of SIP gateways used for legacy consumer SkypeOut calling.

Skype for SIP is a classic case of a transitional offering. Enterprises continue to use their legacy SIP-enabled PBX and then add Skype for SIP such that they can continue making calls but run them over Skype for SIP to reduce costs as they feel more and more comfortable with the advantages of the Skype for SIP exerience. It provides a low cost means of adding voice channels; it also allows a company to expand their calling into new countries at low SkypeOut rates with the only provisioning being the initial setup of Skype for SIP via the business control panel.

More information, including an introductory video, can be obtained and Business Control Panel accounts set up at the Skype for SIP beta website at sip.skype.com.

• Peter Parkes: Skype for Business Blog: Skype for SIP beta program opens up to all businesses.
• All Voice On The Web posts mentioning Skype for SIP.
• Andy Abramson talks about the “Skype Pipe”; he thinks “…. Skype just created a massive pipe into the corporate market.”

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This morning Skype and Digium announced the release of Skype for Asterisk, an Asterisk platform channel driver that allows businesses using Asterisk to incorporate Skype into their calling options.

Since first announcing the Skype for Asterisk beta program last fall, over the past eleven months the beta program has gradually expanded its scope to a broader range of Asterisk developers. The result is that not only has Digium been leading the program involving over 4,000 external participants but also they have incorporated Skype for Asterisk into their own communications operations with Skype accounts such as “Digium Sales” and “Digium Support”, typical of the convention they expect many businesses to follow.

The Skype for Asterisk launch press release includes identification of a couple of Digium Partners providing implementation of Skype for Asterisk to their clients as well as some features and pricing information:

DATUS Corporation is a Digium Select Partner with nearly four decades of experience designing and implementing communications networks in Germany. The company has nearly completed an Asterisk installation at 2,100 sites for LVM Versicherungen, a major insurance firm, and also works with Digium to design features for Asterisk that are of particular interest to European businesses. “Adding Skype for Asterisk to the DATUS indali OBX, our IP-PBX, will offer our customers inexpensive and secure international calling that, for instance, could be used for toll free customer services,” said Jonny Kueppers, vice president of sales and marketing at DATUS. “We believe that the price and cost savings will be welcome with today’s budgets.”

“The combination of Skype and Asterisk gives those companies that have relied on Skype the advanced call management capabilities of Asterisk, while Asterisk users get free calling to more han 400 million registered Skype users and low Skype rates when calling landlines and mobiles,” said Stefan Öberg, vice president and general manager of Skype for Business. “We believe the product will bring together two of the largest groups of users that value flexibility and cost savings in their PBX systems.”

Foehn Ltd, Digium’s U.K. Solutions Partner, has been designing and implementing Asterisk-based solutions for more than five years. The company’s technical director, James Passingham, commented: “With Skype for Asterisk, we can offer our clients even more freedom in business communications. The ability to unlock the lower call costs of Skype provides a huge savings opportunity, especially for those with offices and customers around the globe.”

Skype for Asterisk Features

Skype for Asterisk, which is compatible with the free and open source Asterisk versions 1.4, 1.6 and AsteriskNOW™, as well as the commercially licensed Asterisk  Business Edition™, is unique in the market today. It is the only solution that integrates directly with Skype, enables multiple concurrent Skype calls from a single Skype account, and supports both G.711 and G.729a calling.

In addition, with the new software, customers can:

• Manage business Skype accounts with the Business Control Panel
• Get low Skype global rates on outbound calls (as low as 2.1US¢ per minute to more than 35 countries worldwide; connection fee and fair usage policies apply)
• Receive inbound calls to online numbers
• Route calls according to Skype profile fields, online status and privacy settings
• Streamline customer contact by allowing Web site visitors to place free Skype calls directly to their business with global click-to-call buttons

Pricing and Availability

Skype for Asterisk is available to download now for $66 USD per concurrent call from http://www.digium.com/skype or from Digium Authorized Resellers and Distributors worldwide. Skype for Asterisk comes with 90 days of installation support from the time of purchase.

More details, including documentation and a Buy button, are at Digium’s Skype for Asterisk product page. Update: Fierce VoIP, Skype for Asterisk now available, includes comments from Digium’s Pete Engler and Skype’s Matthew Jordan.

Within the next couple of weeks I will be discussing an implementation of Skype for Asterisk that I have been beta testing for the past few weeks.

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We all know that Skype for iPhone currently requires that you be at a WiFi access point in order to make a Skype call from the iPhone, even though it supports 3G data. So, when highly respected technology reporter Larry Magid, attending today’s D:AllThingsDigital conference, sends out the Tweet, shown to the right, quoting AT&T CEO Randall Stephenson, many questions arise:

• Has AT&T heard that Skype really provides communications software? I think that is the message that Skype President Josh Silverman has been trying to deliver when he states, “software will drive the future of real time communications innovation and efficiencies going forward, not the existing telcos”
• Is failure to allow Skype for iPhone to run over AT&T’s 3G network a tacit admission that AT&T continues to suffer from 3G data network capacity and quality issues? Once again my most recent trip roaming on AT&T in Chicago four weeks ago demonstrated nothing to say service availability and robustness has improved over my previous experiences in PA, WV, VA, NC, SC, CA and NV.
• Is AT&T’s response to SlingPlayer Mobile for iPhone (or BlackBerry) one more challenge to, or subtle admission of, AT&T’s network quality and robustness issues. Is the following statement a cover-up for their failings:
  

  “Slingbox, which would use large amounts of wireless network capacity, could create congestion and potentially prevent other customers from using the network,” an AT&T representative said in e-mail to reporters. “The application does not run on our 3G wireless network. Applications like this, which redirect a TV signal to a personal computer, are specifically prohibited under our terms of service.”

I would invite Mr. Stephenson to Canada where I can demonstrate Rogers’ high quality 3G GSM data network that:

• has robust and reliable 3G data coverage in not only major population areas but also all our major tourist and recreation areas (Whistler, Central Ontario, Tremblant, etc.)
• is always there when I expect it
• has no issue with using SlingPlayer Mobile for BlackBerry (and has made no issue with SlingPlayer Mobile for iPhone either)
• Rogers is offering its Rocket Stick mobile data service over its  7.2Mbps 3.5G HSPA network, placing additional demand on their network capacity.

Bottom Line: Sorry, Randall, but AT&T has a long way to go to show that they understand the real potential of, and that they’re serious about, their mobile business.

For more amusement check out John Paczkowski’s report on Walt Mossberg’s Q&A with Randall Stephenson at D7.

Update: Om Malik reports this afternoon at GigaOm: AT&T Moves Up Its LTE Rollout, Admits To Network Issues. Seems that AT&T is finally admitting they have some issues to address.

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In a recent post, I provided some examples where Skype is being used by small businesses to build relationships with a worldwide supplier and customer base. In the same post I provided a couple of examples where current economic conditions are helping to stealth Skype into enterprises in the medium to large business category. Skype itself claims that about 30% of its use is by businesses. At a blogging for business workshop a week ago and a local WordCamp this past weekend I again encountered several entrepreneurs for whom Skype was a key tool for conversations.

It seems that Skype wants to build up a repository of case studies involving business use of Skype. Last week Skype asked businesses to share their experiences with Skype as a business tool.

We’re looking for businesses like yours to share their experiences with us at Skype. We’re looking for creativity and originality – companies which use Skype in innovative ways around the world to save time, save money or stay ahead, and preferably a combination of the three.

The contest will be judged with three prizes to be  awarded involving Skype credits using Skype’s Business Control Panel along with Skype certified hardware products. More details are available at Peter Parkes post announcing the competition.

While the application form encourages the use of photos and video to support entries, it would also be useful to learn about how Skype not only reduces costs but also how Skype’s services impact business processes, customer/supplier relationships and team building across a geographically disbursed operation. And it’s not simply about voice conversations but are you using Skype chat for virtual water cooler conversations and Skype video to enhance conversations? Or do your activities involve one or more of Skype’s partner’s products for conferencing sessions, call center operations or document management?

Do you have a story to share?

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Legion are the stories of small and medium businesses who are using Skype for their worldwide communications operations.

• Skype is the cornerstone for keeping Toronto-based  b5media’s worldwide staff of bloggers, editors, developers and executives in touch via both informal and formal conversations.
• SeeWorthy gets an assist from Skype when communicating with their Taiwanese supplier (via an Alberta-based translator), North American and Caribbean agents, and prospective European distributors as well as their customers.
• A Canadian-headquartered resource company is using Skype voice and IM for communications with their operations in Asia; their biggest challenge involves time-zone issues. Skype chat’s inherent asynchronous nature helps to address that issue.

Skype itself claims that about 30% of all its user activity is business related. I often encounter small businesses who have a wealth of stories about how Skype contributes to their business success.

But during a recent conversation with OnState CEO Pat Kelly I learned about how Skype is stealthing its way into medium to large enterprises. Pat discussed two examples (who will remain generic until case studies are available):

• OnState received an enquiry from a major North American parts distributor whose operations involve agents, resellers and business customers spread out across North America. While this company has an internal IT team, the CFO was focused on significant cost reductions for their call center operations. He has now contracted OnState to provide voice, chat and other customer relationship communications activities that do not simply save money but provide additional communications processes such as IM with its inherent presence and chat features. Once the contract was signed, the CFO mentioned he would guide his IT personnel with their role in the implementation.
• A European country manager for a worldwide, US-headquartered business found that he was getting charge-backs for “corporate” communications services that did not meet his particular needs. He had enough autonomy that he investigated OnState’s services, went through not only the technical specifications but also the legal reviews and business process requirements. He is now meeting the communications needs of his business ecosystem using Skype and OnState’s other auxiliary services for call center and virtual PBX requirements. Subsequently other European subsidiaries of the same company are implementing OnState’s services. Yet this is a situation where the U.S. head office has yet to be contacted about what additional opportunities for Skype and OnState may exist within their business.

Pat’s key point is that, in today’s economically stressed environments, there’s a trend where CFO’s and business unit managers are making the key communications services decisions in larger enterprises in order to meet their financial goals. IT personnel are playing little or no role in the decision making although they may be involved to a limited degree in the implementation. What are Pat’s key observations?

• The consumer experience with Skype is stealthing its way into business implementations, not only with prosumers and small businesses but also at the business unit level within larger enterprises.
• Why? Skype just plain works. There are no firewall issues; OnState’s SaaS model eliminates capital investment for PBX’s and related infrastructure.
• It’s relatively easy to implement.
• Economic pressures are driving adoption.
• Where a business partner or customer has Skype also, HD Voice, incorporating SILK, provide for more productive voice conversations.
• It’s not simply about using a technical mashup across multiple services (Skype, Google, and Voxbone, for example) involved in OnState implementations; it’s a “business mashup” involving business processes and employee acceptance.

It’s a repeat of a trend that drove personal computers into larger enterprises twenty-five years ago. I recall one story where a Canadian bank Vice President found an employee with a PC that had a modem attached (with, at best, a 1200 kbps speed). The modem was ordered disconnected! Bank security was going to be upheld despite technology progress. Four years later that same bank ordered over 10,000 PC cards from my employer of the day for inclusion in their new, at the time, teller terminal system.

Bottom Line: Even if it’s not totally free it’s the raw cost savings that are driving Skype adoption, sometimes in co-operation with their business software partners. It’s about not only lower calling costs but also the elimination of capital asset costs. For some business markets Skype is stealthing its way into business communications infrastructure.

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• OnState Upgrades On Demand Call Center and Virtual PBX (voiceontheweb.biz)
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• Business Long Distance: Death by 1,000,000 PBX’s (voiceontheweb.biz)

OnState Communications provides hosted communications services that allow any size of business to operate a call center or PBX with low cost worldwide access via Skype, Skype Online numbers or the PSTN, including toll-free and DID numbers. Low monthly fees and service charges (covering inbound numbers and outbound PSTN calling) along with zero capital expenditures are the selling points that have driven evaluation and adoption across a range of businesses.

During early May OnState will be upgrading their services to add:

• a “My Account” dashboard that tracks credits and charges for services such as toll-free numbers and SkypeOut charges in real time
• OnState Mobile allows employees to use their mobile phones (such as iPhone and BlackBerry) to participate as part of a call center operation, either directly receiving customer calls, transferring to another employee in the company, or acting as a secondary support resource to a business’s core sales and support teams
• Warm Transfer and Conferencing for OnState Anywhere — A warm transfer allows an agent to speak with a new caller before transferring the original caller to provide a better calling experience.
• Outbound calling with Caller ID in OnState Anywhere. Enables calling from any device (Skype, SIP soft phone, etc) with a unique Caller ID displayed to your customers.
• Support for SIP Phones. While most calls are handled via softphones, such as the Skype client, OnState services now support selected Polycomm and Grandstream SIP phone sets.
• Several other service tweeks and modifications; check out the OnState blog post for the details.

OnState will be upgrading services to all their current clients over the first ten days of May. As with many other players in the economically challenged Voice 2.0 world, I confirmed in a recent interview with OnState CEO Pat Kelly that they are finding increasing demand in the small-to-medium business market for their SaaS-based services. The key selling point remains offering a disruptively cost effective way to communicate across an enterprise ecosystem comprising employees, customers and suppliers.

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• Business Long Distance: Death by 1,000,000 PBX’s (voiceontheweb.biz)
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Recently launched PamFax 2.0 had three key new features:

• Mac OSX compatible (in addition to Windows)
• Lower “per page” pricing by up to 40%, and
• Fax-In numbers in 27 countries

Signing up for a one year subscription to acquire a fax-in number is about a five minute process when you subscribe to PamFax Professional. What makes it possible to so easily obtain a “local” number in any of over one hundred cities in 27 countries? Short answer: Voxbone.

I first learned about Voxbone’s services when they were a major sponsor of eComm 2008 a year ago March. At the time CEO Rod Ullens told us how Voxbone was able to provision DID numbers in over 4000 cities in 47 countries worldwide at minimum cost. Last fall Voxbone launched their iNum service which creates “universal worldwide ‘local’ numbers” via the +883 country code. Customers for their basic DID services, who have been covered on Voice On The Web, include iSkoot, Calliflower, Mobivox,Truphone, OnState, Evoca and Voxeo.

When PamConsult CEO Dick Schiferli told me about their plans to add a receiving service to PamFax, they were looking for a way to easily provision and manage fax-in number subscriptions. At the time I introduced him to Voxbone’s Rod Ullens and the rest is history. But Voxbone does not simply provide fax-in numbers in 27 countries; according to a press release issued today:

Voxbone was uniquely equipped to bring several critical elements to Pamfax’s 2.0 offering:

• An inventory of direct-inward dial numbers (DIDs) in 4,000 cities and 47 countries, out of which 27 will initially be available to PamFax subscribers to use as their personal fax numbers;
• An IP interface to the telephone network that enables fax documents to be translated into TIFF or PDF data files;
• An API for the automated delivery of these faxes to any software or Web site.

In other words, Voxbone is equipped not simply to “make the connections” involved in receiving a fax but also to ensure that formatting and delivery automation is appropriately handled when receiving a fax via PamFax.

Bottom line: Through Voxbone, documents faxed to PamFax Fax-In customers are delivered as PDF files which can then be printed, sent as email attachments, archived or otherwise viewed and transferred at the recipient’s discretion.

Hutchison-Whampoa’s 3 service in the UK has been the pioneer in offering Skype access and other data-based services, such as SlingPlayer, at low cost. For as little as £10 per month, one could have almost unlimited Skype calling and text messaging on the Skypephone and other selected mobile smartphones. Already 3 has said they are delivering over 1.5 million minutes of Skype-to-Skype calling per day. However, earlier this week 3 announced they were pushing the envelope for free Skype calling even further.

Effective May 1, 3 subscribers will be able to purchase a special 3G SIM card which will allow the user to download Skype software and start making calls to Skype users worldwide with no minimum monthly payment obligations. Come summer 2009, 3 will expand the availability of this offer; from the same press release:

During the summer, 3 will expand its offer making it possible for anyone with a compatible unlocked 3G handset in the UK, to take advantage of free Skype calls, whether or not their phone is from 3. Anyone that wants to talk on a mobile for free will be able to use a Skype-enabled 3 SIM to make and receive totally free Skype-to-Skype calls and to use Skype’s instant messaging (IM).

Basic cost of the SIM will be £1.99; revenue will be generated via associated pay-as-you-go or 3’s other mobile phone services contract offerings. In addition new subscribers will have to purchase one of the supported phones, such as a Skypephone 2 (or, later this year, a new Skypephone 3 which is speculated to have a QWERTY keyboard).

According to 3’s website, their focus from the beginning has been to provide services built around their purpose-built data network using the HSDPA protocol. And, of course, any VoIP-based service requires a high speed data network. However, questions remain:

• What will be the impact on handset battery life? This has been a major factor hindering the provisioning of VoIP over 3G networks.
• Will this service be available to 3’s UK customers when they are roaming in other 3 countries, such as Austria, Denmark, Italy, Sweden and Ireland?
• Which smartphones will be able to take advantage of the expanded offer coming in the summer? Does this mean i can bring my BlackBerry to the UK, buy the 3 SIM, and have free Skype-to-Skype calling while in the UK (or even other 3 countries) and using 3’s service for other calling, messaging, email and browsing requirements?

A hint of 3’s business reasoning is given further down the press release where they provide some information on existing services:

3 UK has found that regular Skype users:

• Are less likely to churn than non-Skype users
• Use more traditional voice minutes than non-Skype users in addition to calling their Skype contacts
• Use Skype IM, but also send more SMS than non-Skype users
• Are more likely to browse the internet on their mobile
• Are higher margin customers
• Are twice as likely to access social networking sites as non-Skype customers

In addition, with the support of SkypeOut calling from 3’s various Skype-enabled phones, one can expect that 3 will share with Skype revenues resulting from SkypeOut minutes generated by this change in services.

3 is also lobbying within the EU for reduced termination charges and “fair pricing for roaming”. In practice they are really pointing out, very pragmatically, that a wireless carrier can generate significant customer recruitment levels, satisfactory revenues and improved ARPU when adopting Skype support with properly structured services.

Which raises a cost advantage of 3’s obligation-free Skype-to-Skype calls and chat messaging: there are no termination charges involved. Skype’s secure peer-to-peer technology has essentially eliminated the need for termination charges along with the associated business development, call record tracking and billing infrastructure costs.

At last fall’s Mobilize 08 Conference organized by GigaOm, 3’s Frank Meehan, Director & GM, 3G Handset and Application Group, stated (hat tip to Om for the reminder):

The Skype phone makes us more margin than any other phone in pre-paid with the exception of the iPhone. About 65 percent of the UK market is prepaid and only 5 percent of those are using data. Smartphones are not as relevant. We also have a massive churn in prepaid in all markets where prepaid exists. So we basically told people, if you spend 10 pounds a month and top it off every month, you get Skype for free. That’s driven incredible loyalty to the device. We have a huge level of top-offs and we’re seeing growth on voice and text on those devices.

3 is certainly providing wireless carrier leadership in the adoption of Skype as a mobile accessible service, demonstrating that there is a business model for the wireless carrier that not only drives subscriber recruitment but also can generate increased ARPU (and revenues) while lowering the overhead costs associated with supporting international calling. Would it be fair to also say that it has the potential to drive down international roaming charges?

Other posts:

• GigaOm: GigaOm: 3 of UK Marries Itself to Skype; Shakes Up the Mobile Market
• Andy Abramson, VoIP Watch: Skype Winning With 3? Actually It’s 3 Winning With Skype

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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!

Skype announces launch of a beta version of Skype for SIP, connecting IP-PBX’s to the Skype cloud.

Dan York, while a keen supporter of Skype, has been campaigning for a Skype to SIP interconnect on his Disruptive Telephony blog. In a post last fall, “Skype and SIP – the two sides of the issue raised by Michael Robertson”, he says:

We need to build the interconnect.

Yeah, there are a TON of issues out there that we still need to address to build that interconnect. There’s a whole host of security issues… there are billing issues… there are trust issues… there are network plumbing issues. Yes, there are all those issues. But if we are to succeed in ultimately bringing about the rich communication experience we want, we need to make this happen.

And for that, Skype’s walls need to come down…. at least a bit.

What we need is that Interconnect from Skype’s cloud out to the emerging IP infrastructure. Think about it… Skype right now has a two-way interconnect between Skype’s cloud and the cloud we know as the PSTN. It’s called “SkypeOut” and “SkypeIn” (or whatever marketing names they are being called now). If you dial my SkypeIn number, you can reach me on Skype wherever I am. From my Skype client, I can call anyone on the PSTN. The two-way interconnect is already there.

This morning Skype announced the launch of a beta version of Skype for SIP as a major initiative for further penetration into the business market. Basically Skype for SIP allows SIP PBX owners to access the Skype cloud as additional inbound lines , via Skype Online numbers, and outbound extensions to their existing PBX, via SkypeOut. From the press release:

Key Features

The beta version of Skype For SIP will enable business users to:

• Receive and manage inbound calls from Skype users worldwide on SIP-enabled PBX systems; connecting the company Web site to the PBX system via click-to-call
• Place calls with Skype to landlines and mobile phones worldwide from any connected SIP-enabled PBX; reducing costs with Skype’s low-cost global rates
• Purchase Skype’s online numbers, to receive calls to the corporate PBX from landlines or mobile phones
• Manage Skype calls using their existing hardware and system applications such as call routing, conferencing, phone menus and voicemail; no additional downloads or training are required.

In an interview with Skype Senior Product Manager Chris Moore, I learned:

• Skype’s’ goal will be to have a totally user friendly interface such that Skype for SIP is a seamless service
• Administration will be done through an extended Skype Business Control Panel interface which, amongst other activities will establish Skype for SIP account mapping, manage online numbers and perform appropriate configuration for the various PBX’s.
• Skype will be looking to work with the various SIP PBX and Unified Communications vendors, such as Cisco, Avaya, Nortel and Siemens. When I asked about Microsoft Response Point, which had been demonstrated to me the previous day, Chris confirmed, yes, they were another prospective vendor to be approached.
• during the beta, Skype will be used on a pay-as-you-go basis; pricing for the service once it is launched has yet to be determined
• Skype will be including security issues as one major consideration (I expect Dan York to have more to say on this issue)
• The service will be configured to take advantage of Skype’s royalty free SILK codec; if both endpoints of a call support SILK, then the SILK support will carry across the Skype for SIP interface.

This has to be a landmark announcement for the IP-based communications space. It effectively allows businesses to integrate the Skype cloud into existing infrastructure to handle all long distance and international calling. Some other initial observations:

• Does Skype for SIP impact the space currently served by Vosky’s PBX services?  It definitely leaves open for Vosky the analog PBX market; one question will be how does Vosky figure out a way to work Skype for SIP into their business activities and offerings during the six- to twelve-month beta?
• It’s currently a beta; applicants for beta participation can apply at www.skypeforsip.com. From the press release: “Applicants will need to be businesses, have an installed SIP based IP-PBX system, as well as a level of technical competency to configure their own SIP-enabled PBX. The initial beta is available to a limited number of participants.”
• Skype also expects to determine an appropriate distribution channel. While ease-of-use is a key goal, there will still be small business owners who will want third party expertise to manage their communications activities. So expect Skype to look to a VAR or Systems Integrator channel to support implementation.
• Skype for SIP broadens Skype’s penetration into the small-to-medium business market. Where Skype for Asterisk introduces a Skype feature-rich Asterisk channel to Asterisk PBX’s, Skype for SIP simply brings Skype cloud connectivity to a major subset of existing small business PBX installations.
• Along another feature axis we see hosted services vs on-premise implementations. Will widely geographically distributed small businesses favor a hosted service, such as OnState’s Virtual PBX, or one of these on-premise PBX offerings.

One sure call: the market for business long distance, especially international calling, is about to be radically disrupted as these services come into play. It brings about new business opportunities and, most significantly, makes any business a global business, if the will is there. With probably over one million IP PBX’s out there (Skype’s press release says over 438,000 were sold in 2008 along), Skype for SIP brings the slow but sure death of legacy international calling, one PBX at a time.

And, of course, Dan York brings his deep perspective, not only on how Skype for SIP works, but also on the security and codec issues surronding Skype for SIP: Skype tears down more walls with “Skype For SIP”.