Widespread use of voice over IP (and specifically the introduction of Skype)

Description:

Voice over IP has the potential to replace e-mail as the current killer application of the internet. Its widespread use (thanks to new voice over IP software, Skype) is a driving force as it will increase overall internet use and penetration.

IP Telephony makes it possible to have a telephone conversation over the Internet or a dedicated Internet Protocol (IP) network instead of dedicated voice transmission lines. This allows the elimination of circuit switching and the associated waste of bandwidth. Instead, packet switching is used, where IP packets with voice data are sent over the network only when data needs to be sent, i.e. when a caller is talking. Its advantages over traditional telephony include:

• lower costs per call, especially for long-distance calls.
• lower infrastructure costs: once IP infrastructure is installed, no or little additional telephony infrastructure is needed.
• future proof as functionality is software (protocol) based and does not require hardware replacement

IP Telephony is not new (even for private consumers). What is new is that users are now actually able to use these services with a decent sound quality and at local calling costs (when calling from a computer to a regular fixed or mobile line) or for free when calling computer to computer.

Enablers:

It's free!! (sort of, computer to computer is free, but when is not free is very cheap)

It's peer to peer. Adding another user to the network costs Skype close to nothing and doing so does not alter the service for other users in any way (no reduction in sound quality because more users are connected)

According to telecom researcher Telegeography, carriers using IP handled only 150 million minutes of international telephone calls in 1998. That's less than 0.2% of total minutes. That number soared to 18 billion or 11% of the international total by 2002. Telegeography expects the tally to increase to 24.5 billion, or 12.8% of the total, by 2003. Two of the largest voice-over-IP (VoIP) carriers, IXTC and iBasis (which has a deal with Skype), handled 2.5 billion minutes in international traffic in 2002, placing them in the ranks of the largest international telecom carriers in the world in terms of call volume.

Skye can be used on mobile devices connected via WiFi

Inhibitors:

It's free!! ....only if the company finds a sustainable business model this could be a driving force.

In the case of Skype, it is not an open spurce software, but propietary, this could limit its growth. Although if the service is free and downloading the program remains free...

Paradigms:

Chep or free voice over IP will change not only the way people talk, but how they interact. Why use e-mail when you can just make a phone call that costs the same? (close to nothing)

Experts:

Various articles from periodicals were used as reference

Timing:

VocalTec Communications released InternetPhone in February 1995

VOIP traffic exceeded 3% of voice traffic by 2000, and is forecast to grow rapidly to between 25% and 40% of all international voice traffic by 2005. Today there are two standards for VOIP switching and gateways: SIP and H.323. The former primarily relates to end-user IP Telephony applications, whereas the latter is a new ITU standard for routing between the circuit-switched and packet-switched worlds used for termination of an IP originated call on the PSTN, but the converse is increasingly becoming common (intertangent.com)

Skype launches its service in mid 2003 claiming it will never charge users for computer to computer communication.

Resources:

BusinessWeek Online, Skype Gives Telcos a Wake-Up Call, August 11, 2004

The New York Times, In Internet Calling, Skype Is Living Up to the Hype, September 5, 2004

Intertangent. (http://www.intertangent.com/023346/Articles_and_News/1413.html)