June 01, 2005

Skype Parasites

Andy comments about Zoomís Pay as you go service. (By the way they seem to offer an In service as well.) Recently Russell Shaw compared Vonage and Skype and suggests that for certain usage models Pay as you go scheme will be more economical. But it is not clear which model is preferable for a service provider.

Subscription model gives predictable, monthly revenue; but enrolling subscriber might be a costly proposition as is evident from points discussed by Om in many of his recent postings. On the other hand, Pay as you go scheme has no holding power. More importantly, in IP networks, it is easy for competitors to parasitically offer services. For example there is a company called Connectotel that offers SMS connectivity to subscribers of Skype. They have released a document on how this is done. By following the instructions in that document, one can offer clones of SkypeIn and SkypeOut services, For example, I could find a rate that is cheaper to call India (using PSTN) than what SkypeOut offers. So I could selectively use this competitorís service, if they offer it via Skype. Since they do not have to provide local POPs in PSTN, their operating cost should be less. This is why I am surprised that these companies that offer international calling cards have not flocked to VoIP subscribers.

Posted by aswath at June 1, 2005 04:20 PM
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