Not fair. I pay my operator a monthly fee for mobile data (10 € for unlimited 384 kb/s including two SIMs / devices, to be exact). Skype pays for their incoming/outgoing data – it doesn't cost extra for them whether the data is originated from mobile network or <any-type> network. Skype is simply not justified to charge extra based on client's connection type, not even if I used Iridium network to route my bytes to them. Maybe Skype has grown big enough to behave as asshole and they know it.
Skype-to-skype is cool but when you're tethered to a computer and internet connection it clearly has limited to value to most people.
Now that phones that run apps and have internet connections are popular the game is changed entirely. They had to give it away for free before because it wasn't as useful. When you can use this on the go it becomes much more useful and they will see many more people using it.
When things change that drastically sometimes you have to re-evaluate your business model.
Then moneytize transparently, i.e. based on true costs. Charging for skype-to-skype calls is fine as long as clients are treated equally whether they were using dial-up, wifi, satellite or avian carriers. The type of client's connection is as unrelated as the color of his/her socks.
People always seem to think that things are priced according to the cost to the supplier, that is wrong. Goods and services are priced to what the consumer will pay for them. Skype are providing a service and people are (they hope) willing to pay for the convenience of having it on their phone. Welcome to the free market.
You're both wrong--and rehashing an old argument that got resolved a long time ago. Goods and services are priced based on both the supply side and the demand side, specifically upon the intersection of the supply and demand curve.
Not in a monopolistic environment, which due to Skype's strong network effect it may effectively be. The concept of a demand curve depends on multiple suppliers with different reservation prices.
No, there's still a demand curve. A monopoly has the power to set a vertical supply curve wherever they want (i.e. at the profit maximizing point) but the demand curve is still simply the demand curve.
Things in efficient markets ARE priced according to the cost of the supplier. But most markets are not efficient. This is not the fault of the customer.
> Things in efficient markets ARE priced according to the cost of the supplier.
Not if you're selling to humans.
Humans value things other than price and features. There are goods that will only sell if they cost considerably more than the cost of production.
The efficient market hypothesis may be true, but only if you consider all costs and benefits and even then, the value of the benefits is not static and you need to account for other things that people might do with their money.
Since Skype uses proprietary protocol and is the most popular VoIP service by huge margin, I wouldn't call the market entirely free. They almost have a monopol, sort of.
Sori nyt vaan mutta sun kannattais kiinnittää vähän huomiota mm. artikkeleihin.. :) "A protocol", "A margin", eikä "monopoli":sta tuu englantia ottamalla lopusta i pois.
( He's Finnish and his English contains mistakes that are typical for Finns, which is unfortunate, and could be avoided )
This probably has to do with whether or not a device is able to participate in Skype's p2p call routing. If being on 3g introduces too much latency or has too limited bandwidth to contribute in the network, then each client will have a marginal cost to Skype. Maybe they're trying to ensure they can keep up with that.
I'm intensely curious who's pulling the strings behind this, is Skype really to blame or is it the mobile carriers putting pressure on them to collect more ARPU by creating yet another fee to collect from subscribers.
Skype was sold for multiple billions of dollars. The purchasing group must have seen some untapped opportunity to generate revenue that eBay was not able to effectively address. So, I think its realistic to think that this turn of events is tied to the purchasing group's revenue strategy, and not carrier action.
With that said, if this ends up only applying to AT&T, and not other countries iPhone apps, then its clear who's to blame. I didn't see anything in the article that noted this was limited to AT&T.
my bet is on the mobile carriers putting pressure on them, especially AT&T. The last I checked, Skype was still plenty free for Verizon. In fact, it seemed like Verizon and Skype took time to make sure their system worked wonderfully together, forcing local calls to go through Verizon themselves, international to have the option of going through Skype, and Skype to Skype going through a special phone number. In fact, I just tested Skype on my Motorola Droid on Verizon's service. It works wonderfully and said nothing of a soon ending of the free service.
If it was the carriers, Skype had all the hand--no one wants to hear that their carrier wants to make you pay more money. They could have announced that carriers were looking for ways to try and get you to pay but that Skype told them they wouldn't play ball. Instant win.
Skype will break its freemium promise to Skype users in three months. Skype for iPhone will require a subscription to make Skype-to-Skype calls over 3G/Edge starting in September 2010 according to Skype. This changes things from "Skype-to-Skype calls are free", which they've been saying since launch, to "Skype-to-Skype calls are free over landlines and Wi-Fi unless your Verizon or Three mobile operator subsidizes your service."
Skype has no marginal cost if I make that iPhone 3G call. Why are they charging separately?
Presumably subscriptions will apply to future use of Skype-to-Skype on Blackberry, Nokia, and Android phones.
'Net Neutrality' doesn't exist yet. A least not officially. However if/when (probably when) it does pass it would probably prevent ATT from charging skype more to route phone calls over thier network.
This isn't a net neutrality issue. This is a 'people are circumventing our system through our system and we need to stop them', as well as a "our networks are HEAVY LADEN with traffic because of all these smart phones we didn't quite have the infrastructure to support. We need to start clamping down a little" issue (I imagine)
Of course it is. Packets should be packets, if you don't have the network to handle the packets, lower caps or raise prices, don't start making people pay based on the kind of packets they send or receive. It is precisely a NN issue.
> " We need to start clamping down a little" issue (I imagine)
"Clamping down a little" is not a problem, "clamping down on (VOIP|Gaming|long-lived downloads|P2P streams)" is
> if you don't have the network to handle the packets, lower caps or raise prices, don't start making people pay based on the kind of packets they send or receive.
> "clamping down on (VOIP|Gaming|long-lived downloads|P2P streams)" is
P2P streams and long-lived downloads have two major things in common: heavy bandwidth over long periods of time. Those activities, in particular, are considerably heavier on the network than, say, downloading a single, or even a series of webpages.
One way the major carriers can do this is by disallowing certain kinds of activities. For example, as seen on the iPhone, users are not allowed to download files more than 10MB in size. That isn't a case of "what" a person can download, but instead an issue of "how much" a person can download in a small period of time. Is that still 'net neutrality'? And, if not, then how is VOIP any different?
(This is under the presupposition that the price increase was ATT's doing, and they're not doing it because it's taking away from their profits; but instead they're fearing that VOIP will cause an even greater tax on their already strained network.)
> One way the major carriers can do this is by disallowing certain kinds of activities.
> Is that still 'net neutrality'?
If you disallow specific network activities, yes it's a network neutrality issue.
> users are not allowed to download files more than 10MB in size
I do not believe that is correct. The AppStore application is configured to not download applications over 20MB (up from 10MB since February) over 3G, and the iTunes application does the same thing for music or podcasts, but that's a setting at the application level. I don't think e.g. Safari refuses to download files more than 10 (or 20) MB, or that the connection cuts off with a corrupted file.
> That isn't a case of "what" a person can download, but instead an issue of "how much" a person can download in a small period of time.
No, because again you're disallowing specific activities (e.g. VOIP, P2P) not certain network behaviors (data streams of over 1MB for over 10mn for instance). Therefore your network management is about activities (traffic shaping) not resources (resources management) which makes it an NN issue. Because you're arbitrarily preventing the users of the network from performing specific activities even though the network itself can handle them.
> This is under the presupposition that the price increase was ATT's doing, and they're not doing it because it's taking away from their profits; but instead they're fearing that VOIP will cause an even greater tax on their already strained network.
I don't believe that for a second, but again if the issue is resources, then write policies in terms of resources, not activities.
From Skype's perspective, how is the cell network different from any other ISP? It's the carriers who will shoulder the burden; and there's no indication that any of the fee is going to them, given that Skype says "operator fees may still apply". I don't get it.
It's many times more useful to use Skype on your mobile. If you're on 3G, it means you have no access to desktop Skype. And if it's more useful to you, they can charge for it.
The extra usability is a function of the carrier's network, not anything on Skype's end. And since many of us are already paying our carriers for data plans, why should Skype arbitrarily charge us a second time? I still don't get it.
No one's going to stop them from doing what's within the law; that's a given. I'm saying it strikes me as unethical, and it assumes a certain infancy in the public's tech acumen... which perhaps there is! But it still seems like a poor assumption to base a business on going forward.
Now I'm just hoping someone comes out with a iChat/AIM/Jabber/GTalk-like P2P standard for voice (does this already exist?).
Not sure about iChat and AIM, but GTalk already uses an XMPP-based protocol called Jingle. Theoretically you can use it between any 2 jabber clients which support it.
Upon seeing this I am contemplating canceling AT&T service - keeping my iphone and get a Verizon or Sprint MiFi router and use Skype to place the calls, as well use my Google VOice number to ring my skype in number. I use my GV # now anyway so I can just forward it. I dont talk on the phone that much more so text, facebook, email and twitter.
Im not sure im going to do this but it's tempting even more when skype will be able to run in the background on my 3GS when 4.0 comes out. I would save myself $10 to $20 a month doing this. THe MiFi I can carry in my wallet.
"Skype-to-Skype calls will always be free but there are a few things that cost a little such as calling mobiles and ordinary phones when you want to get hold of your friends that havent started using Skype yet."
I guess I don't think it's that big of a deal. When Skype promised "free Skype-to-Skype", I don't think they considered that they would eventually be used on smartphones. It'd probably be smarter if they'd just charged a few bucks from the app first place, though.
This may also be a condition imposed by Apple, because people with unlimited data plans would use Skype instead of their (limited) included airtime, which I'm sure doesn't make cellular partners too happy.
But does Skype via 3G actually cost them more than a WiFi call? Assuming their calls still use the data network, it's not like they have to buy and maintain gateway equipment. I don't see how the smartphone issue is relevant.
I agree though, that this move may be more political than anything else w.r.t cellular partners.
It doesn't cost them anything more, but I bet it means more usage. It's a lot easier to have Skype always in your pocket than just when tied to WiFi. I think they foresaw a future when data-plan only phones make all their calls "for free" through Skype.
When I bought my last phone nearly three years ago, the selling point was that pre-installed skype app worked for free over their 3G network and skype to skype calls were free. Skype out calls were barred though. I presume this new charge only applies to iphones? If it is the case that Apple badgered them into applying a charge which some are suggesting, I presume this information will leak at some stage. Won't be good PR if true.
I can think of absolutely zero reasons, technical or otherwise, that Apple would want Skype to charge for only its iPhone software, much less a reason strong enough to "badger" them into charging. Isn't it far more likely that Skype's new buyers see that they need to begin to monetize their largest usage stream in order to survive, especially since that usage stream has started to migrate to more "usable" platforms?
Does this have anything to do with a potential difficulty in establishing direct connections between Skype clients that are both on 3G networks? Are they running relays for these clients that they are trying to recuperate from?
I think they started lying earlier when they offered 'unlimited' that isn't really unlimited, but subject to a so-called fair use policy. I would call that 'virtually unlimited'. FTC, where are you??
I lost any trust for Skype the first time they emailed me that I had 7 days to use some credit or they would confiscate all of it. How is that not theft?
That was discussed here, probably when you brought it up last time. It's the same reason that gift cards expire and properly written NDA's have time limits. Nobody wants to owe somebody something until the universe dies, especially accountants, and especially if the people to whom that debt is owed, are dead or have forgotten about it. It would be insane to carry it on your books until doomsday.
I disagree with this, it's entirely possible for vendors to honour gift cards (and credits) indefinitely. In fact, here in Canada, in most provinces, if not all, it's law and has been for some time:
http://www.gov.on.ca/mgs/en/News/133713.html
The problem comes in the accounting. Try borrowing X million dollars against 2X million in assets when you have 4X outstanding debts that can be called in at any time. Sure, they probably won't be, and you might discount them to near zero, but the lender won't be so generous.
Exactly.... I actually found Skype's way of handling this to be far more fair and less predatory than most - not only were they generous with the expiration date, but they insisted you only had to log in and place a single call (spend a penny or so) to keep it going another 6 months, or whatever.... it's just keeping dead liabilities from accumulating... and skype was NICE about it, sending me all those notifications.
I'm not bothered by this, because it's their funeral. There are other VoIP programs, it's not particularly difficult to write one, and with Android set to dominate open-architecture 3G phones, something else will dominate VoIP. Hopefully, something open source and using an open protocol. (SIP?)
Oh and if you bought an iPhone and can't access the cost-free VoIP solution? That'll teach you to buy locked-down hardware, you idiot[1].
1: this description does not apply to people who took an eyes-open decision to buy locked-down hardware, knowing it was locked down, realising the consequences and accepting them.
Skype's main attraction is not the technology, but the network effect and it's closed system. You could make a cool SIP client for Android/iPhone/etc. but it wouldn't matter because you wouldn't be able to talk to 90% of the mundane's who only have Skype.
Skype's network effect and lock-in is extremely small compared to something like Facebook, or even something like an IM network.
Think about it: early adopters (techies) start using a free competitor (or several free competitors). They get their less tech-savvy friends and family to switch. The rest of the world follows. It's easy to explain ("It's like Skype"), the carrot is obvious ("except it's free"), and the lock-in is minimal - download a new client, enter the contact you want to call, and you're done. There's no chat history, or complex social network, or tons of uploaded pictures, etc. etc., to keep people from switching.
I don't think the "mundanes" really use Skype, they still use regular phones. If someone's savvy enough to use Skype, they're savvy enough to switch to a free competitor if it's good enough.
Quote: I don't think the "mundanes" really use Skype
You are wrong based on my experiences. Skype is used for free international calls all over the world by "mundanes". Immigrants use it to communicate to their home countries. A local immigrant-run mom&pop store in my Helsinki neighborhood is even advertising Skype-calls in addition to normal international calls.
And I think that Skype has some brand value as it's been used for these very personal calls between family members.
However, you are right that the network effect for Skype is not that strong: As it's used for "calling home", a hypothetical better and "cheaper" Skype-competitors can spread family-by-family, as it's easy to replace only two endpoints. But it will nevertheless take several years, which gives Skype time to adjust their strategy.
Semantics - I just don't see any point in calling Skype users "mundanes". They had the incentive to learn how to use the technology because of the cost savings, they'll have that incentive again in the future if it becomes necessary. I think we're basically in agreement.
That really depends on the average size of someone's network. How many networks are only composed of 2-3 endpoints? (most common example - talking to family "back home"). Compare to Facebook's 100+ average network size.
The only reason skype is the king right now is because nobody has motivation to switch to anything else. Skype works, without hassle. It's a good product.
The moment it ceases to be a good product, though, there is nothing holding them in their marketplace. The world can hop onto a new piece of p2p VOIP software in the blink of an eye.
> Skype's main attraction is not the technology, but the network effect
I agree. Having said that, it's not difficult to change to another system. I'm a member of an organisation that has weekly VoIP conferences. We used to use Skype, but that proved problematic when more than 5 people were involved. So we (fairly painlessly) moved to another solution. Other people, if they find Skype painful, will move too.
I'm pretty sure he was talking about Apple having the opportunity to block competing VoIP solutions (say Google Voice). With Gizmo going to Google you can bet that they will be doing really interesting things with SIP on Android.
Background VoIP support in iPhone OS 4 suggests Apple has no intention of blocking these apps; in fact, it seems that they're encouraging them. And as I understand it, G Voice is not a VoIP solution yet. (And that's not to say I agree with it being blocked. On the contrary, their UI — the supposed rejection reason — doesn't look much different from the other dialer apps, including Skype.)
As far as "competing VoIP solutions", it's not like Apple is competing in the VoIP arena; they seem perfectly content to let other companies battle it out.
Far from it. If Apple has an off-switch for any potential competitor to AT&T, which any VoIP provider is, then the only way for another VoIP provider to take on Skype on the iPhone is to have enough market share outside of the iPOS garden to make it too costly for Apple to hit the kill switch.
Skype won in part because other attempts at VoIP didn't work very well. There are lots of practical problems in just getting a p2p connection to work, there are often firewalls to route through. Trying to debug these is not helpful when you're just trying to find a way to talk with your mom.
I'm guessing the reasoning behind this is that phone based Skype calls actually cost Skype money because more data has to be routed via them rather than the peer-to-peer infrastructure that regular desktop Skype uses. If there's a technical reason why this is the case (i.e. you can't use peer-to-peer on phones because of bandwidth issues) then I can't see how a competitor would be able to undercut them without finding someone to subsidise it.
