Skype Technologies, whose software has allowed millions of people to make free calls on the internet, is about to go mainstream.

The internet calling rebel plans to start offering calls from computers to regular phone lines anywhere in the world for less than US2˘ a minute. The company last week announced a deal with Level 3 Communications and other carriers to route the calls.

In less than a year, Skype — a creation of the makers of music file-sharing software Kazaa — has attracted more than 7 million registered users by offering free software that allows them to make free calls from one computer to another.

The move by Estonia-based Skype comes soon after Verizon Communications, the largest phone company in the US, launched its own nationwide internet calling service. AT&T and Qwest Communications already offer internet calling, as do many of the largest cable companies in the US and a slew of upstarts.

Calls made via the internet cost significantly less than calls over telephones because the technology sends calls in data packets over the internet or a phone company’s own network instead of tying up a phone line. High-speed internet connections are required.

While a number of the first internet calling companies, such as Skype, only routed calls from one computer to another, companies have since designed special equipment that allows customers to route calls via phones. Technology research firm Yankee Group predicts that some 17 million people will use internet calling services by 2008, reshaping the world’s telecommunications industry by significantly lowering the costs.

Verizon’s new service starts at $US29.95 ($42) a month for unlimited local and long-distance calls for the first six months for existing broadband customers. Internet start-up Vonage Holdings offers phone subscriptions for as little as $US14.95 a month and as much as $US29.95 a month.

Cable companies are also using internet calling technology to add phone service to their product portfolios, posing an ever greater threat to regular phone companies such as Verizon, SBC Communications, BellSouth Corp and Qwest, which collectively have lost millions of subscribers in recent years.

Skype’s business model is different from its rivals. The company doesn’t charge a monthly service fee but instead charges for calls by the minute. However, calls from one Skype user to another cost nothing.

To defend themselves against the looming threat of internet start-ups and cable companies, phone companies are steadily expanding their range of services to everything from satellite TV to long-distance.

They also keep dropping their prices.

Skype’s free internet calls work much like instant message and voice services on the internet. Callers download the company’s free software from its website and register a username. They can then talk to other registered users — and now to users of regular phones — through headphones plugged into their PCs.

Wi-Fi networks could be next cost-saving telecom move

By ELLEN SIMON

The Associated Press

Now that some Wi-Fi «hot spots» have grown into broader neighborhood «hot zones,» the next wave is waiting.

Coming soon: phones and gear that send conversations over wireless Internet networks — for free or at a fraction of the cost of traditional calls.

Mobile phone maker Motorola Inc. has a device that would seamlessly switch calls from cellular networks to cheaper Wi-Fi networks wherever they are available. Discount carrier IDT Corp. is testing consumer Wi-Fi phone service in Newark, N.J.

If successful, Wi-Fi calling would be one more factor decreasing calling costs and shrinking revenue at traditional carriers.

«The potential is enormous as an alternative to conventional telephony,» said John Jackson, a wireless-technology analyst at The Yankee Group.

Until recently, Wi-Fi phones were limited to businesses and colleges that could set up Wi-Fi in a building or a campus. Now, Wi-Fi «hot zones» range from a 100-block section of Spokane, Wash., to the Gare du Nord train station in Paris, broadening the market for Wi-Fi phone service. Kansas City has its share of Wi-Fi zones, such as Kansas City International Airport.

«Hot zones are proliferating,» said Robert Schwartz, IDT’s executive vice president. «We think in some segments of the market, this could replace home phones.»

Wi-Fi — short for «wireless fidelity» — phones employ a technology known as Voice over Internet Protocol, which translates conversations into packets of data that are sent over the Internet, instead of the old, circuit-switched phone system, for part of their journey.

Wi-Fi antennas broadcast a high-speed Internet connection over the radio spectrum to computers within a few hundred feet. Because that part of the spectrum is unlicensed, free and low-priced Wi-Fi access has cropped up in cafes, bookstores and airports. There are about 18,000 Wi-Fi hot spots in the United States, and the technology is used in hundreds of thousands of homes.

ABI Research predicts that the Wi-Fi voice market will be just $20 million by 2009. By comparison, the five largest U.S. telecom companies had $188 billion in revenue and $18.7 billion in profits in 2003.

Still, voice over Wi-Fi could siphon business from landline and wireless carriers already struggling amid intense competition.

Consumer long-distance companies like IDT see broad new markets for Wi-Fi phoning.

IDT sells 20 million calling cards a month, mostly to new immigrants who may not have their own phones. The Wi-Fi phone packages the company is testing would be aimed at the same demographic, with prepaid service, like its calling cards. Schwartz said IDT would expand the offering beyond Newark if it was successful.

With big telecom carriers showing little interest in advancing voice over Wi-Fi, David Gross, a senior analyst at Wireless Data Research Group, thinks the big test will be whether businesses adopt it, at the very least for internal calls.

Some already have — and are enjoying both cost savings and extra functions made available by voice over Wi-Fi.

Vocera Communications Inc., a privately held maker of Wi-Fi communications products, has signed on about 65 hospitals, libraries and retailers, including Best Buy Co. and Target Corp.

No longer obscure, VoIP is catching on with major telecoms

By DAN RICHMAN
SEATTLE POST-INTELLIGENCER REPORTER

Save 20 percent on your phone bill and get cool features that just aren’t possible with conventional phone service?

That sounded good to Bainbridge Island’s Bob Silver, who in September began using a once-obscure technology that suddenly seems irresistible to major telecom players: Voice over Internet Protocol, or VoIP.

Within the past 10 days, three of the voip provider, internet calling // [ source ]