Skype and VoIP Ecosystems

I just read an article explaining Skype’s exciting new Voice Services Program, which allows any content provider to provide free or paid voice services. What differentiates this announcement from run of the mill partnering press releases put out by so many companies is the sheer volume of callers using Skype.

People say that Vonage will reach critical mass at around a million users. The company did in fact recently announce they have one million lines which for the sake of this article we will assume is the same thing. So Vonage has reached critical mass. A million subscribers is a phenomenal accomplishment as every Vonage customer has to install hardware in their home.

Contrast this to Skype where users have to merely download software. Sure this is easier but Skype has had according to their website over 162 million people download their software. Somewhere around 30-40 million people use Skype out of the 162 million downloads — which is not a bad ratio in my opinion. When you look at an active community of 40 million people you realize you have a real-world phone company on your hands. This is a huge number.

Which is why it makes sense to slowly but surely extend your reach into other areas as the world’s largest VoIP phone company. The company has done lots of smart things lately such as launching a paid service allowing people to connect to the PSTN and also a developer program allowing companies to build products that interface with the Skype network.

The Voice Services platform is yet anther extension allowing partners to come up with services that users can use for free or a price. Companies like Map Telecom, Voxeo, and Tellme are part of the network of companies allowing developers to come up with applications the Skype community can use.

What are examples of applications that people will want and pay for? Live traffic reports, horoscopes, language learning tools and international delivery tracking systems. Well these are what the company suggest are going to be some of the applications we will see. I believe some of the biggest uses will be dating services and porn. I suspect porn will be big as there will be little to no paper trail when using the service. I checked Skype’s Terms of Service as I suspected porn might be banned but it isnt.

I have written about VoiceXML many times over the years. It is a very powerful programming language allowing developers to easily develop complex IVR and speech applications. Skype has essentially brought the power of VoiceXML into the world of VoIP.

VoiceXML is not new but this announcement allows service providers to make money from people around the world without the need for their customers to have to pay for long-distance. So if you have a killer voice service in Spain, people around the world can now connect to it without having to call long distance and you in turn don’t need a slew of international numbers to have a slew of international paying customers.

Really this is an arbitrage play enabling voice services to be provided via VoIP. The idea is great. It shows how amazing VoIP is and how it can be used to enable people to come up with new business models. People will get rich because of this sort of concept and customers will get services they are willing to pay for. Once again, VoIP shows how it can be used in ways we never envisioned just a few short years ago.


I have had great response to this article and the following are some of the comments that tell me I was right on with my assumption that porn will be a huge part of the Skype announcement.

In fact some industry experts tell me they think adult applications will almost certainly be the first "killer app" at the intersection of VoiceXML and VoIP.

In addition to the "clean paper trail" I mentioned above, Skype can help address another adult phone industry problem. It is very difficult for adult chat type providers to get and keep a merchant account to do credit card charges. The merchant account providers generally don’t like the business because it has a high percentage of charge backs ("Honey, you said their is a charge for what on our credit card? That must be a mistake, I’d never call there. We need to dispute that.")

Merchant account providers are unlikely to turn off Skype in any scenario. Skype is just too big, and Skype users don’t pay a Skype bill with their card, they pre-purchase Skype credit that sits on their Skype account.

In summary, Skype can solve billing issues on both the client and provider side. Think of the above as an amplifier. This will be very big.

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