Emerging Business Models in Voice: the Impact of Skype and Other Private VoIP Applications
The launch of Skype’s free telephony software download in August 2003 caught the industry’s imagination as it rapidly overtook more established VoIP players to attain subscriber figures never before seen in this emerging segment. The software, initially offered to the users of KaZaA’s file sharing network, spread through word-of-mouth, with no traditional marketing, to claim over 7 million users in August 2004. Several copycat services have been launched this year, all offering free on-net calls within their closed user groups and offering optional extras including voicemail, conferencing and termination services to the PSTN. These all have minimal network infrastructure, relying as they do on ‘peer-to-peer’ topologies to support the services. These private VoIP applications (PVAs) highlight the susceptibility of traditional voice service providers, both fixed and mobile, to new business models made possible by widespread broadband access.
This report assesses the potential impact on the Western European voice market of these PVAs. It evaluates the underlying business models and quantifies their short-term impact on the core businesses of both fixed and mobile service providers. The longer-term potential for a ‘critical-mass effect’ of PVA users giving rise to a new market structure is also explored and the possible scale of its impact is determined. The report explains how existing service providers can protect their revenues, and evaluates the strategic alternatives available to market participants.
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