[IP] Tune In, Turn On, Skype Out
Begin forwarded message:
From: Dewayne Hendricks <dewayne@xxxxxxxxxxxxx>
Date: July 1, 2004 9:44:54 AM EDT
To: Dewayne-Net Technology List <dewayne-net@xxxxxxxxxxxxx>
Subject: [Dewayne-Net] Tune In, Turn On, Skype Out
Reply-To: dewayne@xxxxxxxxxxxxx
Tune In, Turn On, Skype Out
By Kevin Werbach
Published
07/01/2004
<http://www.techcentralstation.com/070104F.html>
Somewhere between Sweden, Estonia, and London, a small band of software
developers is fomenting a revolution. Their product, Skype, has been
downloaded fifteen million times worldwide in less than a year, without
any marketing budget. It is provoking consternation among government
officials. And it has large incumbents worried.
If that sounds like the profile of peer-to-peer (p2p) file-sharing
programs like Napster and Kazaa, it should. Not only is Skype a product
of the same team that launched Kazaa, the most popular p2p file-sharing
application, Skype is a p2p tool itself. Only, with a twist. Instead of
sharing files, Skype shares voices. It is a voice over IP application.
And in mid-June, with no fanfare, it blew a hole in the Federal
Communications Commission's halting efforts to micro-manage the
transition to a VOIP world.
Skype's great step forward is called SkypeOut. A Skype user can now
call any telephone subscriber in more than a hundred countries. Fees
throughout the US and most of Europe and Asia are .012 Euros per
minute, or about 1.5 cents. And Skype is global. There is no difference
between domestic and international service: a call to New York from
Japan is the same price as one from Philadelphia. Calls to other Skype
users still cost exactly zero.
SkypeOut's low rates for global dialing are a boon for users. SkypeOut
also shows how quickly a company can innovate when it leverages the
open Internet data platform. There is perhaps no clearer proof that
voice telephony, which generates hundreds of billions of dollars a year
for carriers, will eventually be seen as a feature of the Internet,
rather than the reverse.
Yet, there's a catch. SkypeOut creates new fissures in the FCC's shaky
VOIP regulatory edifice.
Until now, Skype was a private service. A Skype user could only call
another Skype user. Skype also requires a user to plug a microphone and
headset into a PC, rather than calling through an ordinary telephone.
These aspects, combined with the fact that Skype was free, appeared to
bring it squarely within the confines of the FCC's Free World Dialup
order. In that decision, the Commission held that a free, private,
software-based VOIP service should be treated as an unregulated
information service. Three months later, it reached the opposite
conclusion with regard to AT&T's VOIP backbone transport offering,
holding it subject to legacy access charges as a form of regulated
telecommunications.
The FCC, in essence, set up two goalposts. On one end, full regulation,
and on the other, complete freedom. Unfortunately, the playing field in
the middle has no yard markers. The FCC's distinctions are of little
value when a Hail Mary like SkypeOut can take the form of a transparent
software update. Skype is also partnering with handset vendors to embed
its software, freeing the service from dependence on a PC. In other
words, it no longer fits neatly into the FCC's framework.
FCC Chairman Michael Powell recognizes the challenge Skype and similar
services represent. Speaking to a conference at UC San Diego in
January, he acknowledged that the regulatory approach the FCC had
followed for seventy years was dead. Finished. Kaput. Or, in his words,
"I knew it was over when I downloaded Skype. When the inventors of
Kazaa are distributing for free a little program that you can use to
talk to anybody else, and the quality is fantastic, and it's free -
it's over. The world will change now inevitably." Powell wasn't just
talking about the free, PC-based Skype. He clearly understood that it
was a matter of time before Skype bridged the gap to the more than one
billion existing phone users. And he understood that it was as much an
opportunity as a threat to the FCC's underlying public policy goals.
In such an environment, the FCC should devote itself to facilitating
the transition from circuit to packet networks for voice. If it tries
to fight Skype, it will face the same war of attrition that has
bedeviled the music industry. That would benefit no one, least of all
the American people.
As voice telephony becomes a software application, its evolution will
accelerate. The bridge from curiosity to mainstream may be short.
Regulators should pave the way, or they will find themselves left
behind.
Archives at: <http://Wireless.Com/Dewayne-Net>
Weblog at: <http://weblog.warpspeed.com>
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