Is Skype's challenge to telcos dwindling?

Despite a continued rise in usage of Skype, Australian ISPs and telcos have dismissed any notion of a serious threat

Australian Internet Service Providers (ISPs) and telecommunication carriers have shrugged off any notion that free Voice over Internet Protocol (VoIP) services such as Skype are threatening their businesses.

Late last year, the Australian Communications and Media Authority (ACMA) said the rise of Naked DSL among ISPs and the increased frequency of internet usage were driving uptake of VoIP services.

In a report titled, Changes in the Australian VoIP market, the ACMA pointed to data collected from Telegeography, showing an increase of Skype’s international traffic in 2008 of 41 per cent to 33 million minutes over the previous year.

The report also cited data from Roy Morgan Single Source, where “the majority of consumers access VoIP via their PC or laptop (76 per cent) and 17 per cent access it via a home phone; only six per cent access VoIP via their mobile phone.”

This data reflects the results of an online survey conducted in January 2010 by Galaxy research, Skype’s Australian partner market research company, which found 44 per cent of Skype subscribers used the free technology during the Christmas-New Year period to make calls. However, the survey did not disclose if this was an increase from the previous year.

According to the senior research manager at Frost and Sullivan, Phil Harpur, although Skype continues to make an impact, the amount of revenue local ISPs get from VoIP would be a very small proportion of overall revenues.

“Even if Skype continues to make inroads it is not an immediate threat to their revenues although it does have some form of impact on the potential growth areas if Skype continues to gain momentum,” Harpur said.

He adds that even though VoIP will remain a niche application for the next few years, the roll out of the National Broadband Network (NBN) throughout 2010 may increase the popularity of such services.

“Once the National Broadband Network takes hold, you will see the gradual demise of PSTN local access in preference to VoIP but that is unlikely to be provided by Skype for the majority of the public”

A Telstra spokesperson told Computerworld that despite predictions free services such as Skype would take off in mainstream Australia, "that claim is still far from reality".

“There may be costs in addition to the call cost for using VoIP, including connection charges, equipment charges for broadband and VoIP modem, an IP handset or headset, and an on-going monthly subscription charge,” the spokesperson added.

The Chief Executive of Primus Telecom Australia, Ravi Bhatia, said although Skype has had an impact on most ISPs, it is not threatening the telco's business.

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