April 22, 2005

Yahoo!BB phone is a Different Service

Andy Abramson quotes an AP story on Yahoo!BB phone service. According to that story, 80% of VoIP users are in Japan. We all know that that can not be true. After all, Skype has 35 million registered users and Yahoo!BB has only 4.5 million. More seriously though, Yahoo!BB phone service is different than the garden variety VoIP service providers and they are also different from Skype.

First of all, Yahoo!BB phone is not a replacement for the traditional service. All the subscribers get POTS from the incumbent, DSL service from Yahoo!BB. The phone service comes with BB service whether you want it or not. That is why the subscriber number is high. This caught even some bloggers in the VON forum by surprise, The DSL modem has built-in ATA with some smarts: it fails over to POTS under failure conditions, emergency calls are forwarded to the POTS line. But all other calls (it seems that in Japan even local calls are metered) are switched over to Yahoo!BB network before being terminated at the PSTN, at a reduced tariff. In other words it is an unadulterated arbitrage play. “Mind you, there is nothing wrong with that.” You will never catch them saying that PSTN is a dinosaur, unlike some of the VoIP evangelists. They are also not Skype because the only way you get the phone service is if you subscribe to BB service.

But they share something with Skype. Since their tariffs are usage based, the subscriber count is not consequential, except for mC2 marketing. So the really useful metric is ARPU. As far as I know Skype’s number is not publicly known. But Yahoo!BB phone numbers are known – about 1100 yen per month. Interestingly it is almost the same amount that Skype is targeting.

Posted by aswath at April 22, 2005 04:13 PM
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There is a difference between a PAID carrier and SKYPE which is free and peer 2 peer communications. I doubt that Skype has the number of Skype In and Out combo customers that either Vonage or Yahoo BB has, and thus the comparison is not relevant.

The rest of your logic i'm in agreement.

Posted by: Andy Abramson at April 22, 2005 04:17 PM

Point taken.

Posted by: Aswath at April 22, 2005 04:49 PM

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