Skype broadens its Net phone horizons
The start-up hopes to expand beyond its free software offering but with a pricing model that differs from that of carriers like Verizon.
The company said phone carriers Colt Telecom Group, iBasis, Level 3 Communications and Teleglobe have signed on to help it launch its SkypeOut service.
Until now, privately held Skype has only distributed free software that allows people to make no-cost Internet phone calls from one computing device to another--but not with telephones. The company's new service, which will be priced on a per-minute basis, is available now in test form to users of the company's software.
The individuals who launched Luxembourg-based Skype also authored the software behind the Kazaa file-sharing network. Terms of the partnership agreements were not disclosed, but Skype lauded the four companies for helping it connect with the public switched telephone network.
Locating local internet providers
"These companies are visionary in recognizing that terminations to the legacy public telephone network can be expanded with the advent of Internet telephony and the global proliferation of broadband," Niklas Zennstrom, Skype's chief executive, said in a statement. "We will now move quickly and offer SkypeOut calls to landline and mobile phone numbers around the world."
With its new service, Skype will join several carriers, including AT&T and Vonage, that offer service to phones based on voice over Internet Protocol. Such service is cheaper than traditional phone call plans because VoIP routes calls over the Internet rather than over traditional networks, which are heavily regulated and taxed. Downsides to VoIP include spotty voice quality, problems with the routing of 911 calls and the service's reliance on electricity.
Locating local internet providers
Some companies, including Yahoo, offer free VoIP software and services, but these typically require subscribers to use computers to make calls, rather than phones. Skype's existing software fits into this category, and the new service will piggyback on it. The company's free software has been downloaded by more than 16 million people.
Skype's per-minute pricing model will differ from that of some other paid VoIP service providers. Verizon Communications, for example, will charge users on a monthly basis for its Net phone plan. Verizon announced its nationwide Internet calling plan on Thursday.
Skype said customers will prepay for their calling time, and the company estimates that its service will cost less than 2 cents per minute. In the test version of the service available through the company's Web site, a customer can set up an account of $12 (10 euros), $30 or $62. Accounts are charged at rates ranging from 1 cent to 6 cents per minute, depending on where the call originates and which region is being called.
Skype will also look to derive profits from the VoIP plan by trying to get subscribers to buy premium services like voice mail and conference calling.
The company has yet to say when it will formally launch the SkypeOut plan. Its venture into the commercial world, however, means that it may eventually butt heads with regulators. For now, commercial VoIP is regulation-free, but Federal Communications Commission rules are expected in the next few months.
Zennstrom said regulations "are necessary in a monopoly; VoIP is not a monopoly."
CNET News.com's Ben Charny contributed to this report.