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Skype: Interference on the line?

With customer complaints mounting, CEO Niklas Zennström wants to make sure Skype doesn't become a victim of its own success.

Skype CEO Niklas Zennström vowed to shake up the phone industry 20 months ago with his creation, the first ever peer-to-peer Internet phone service.

More than 110 million downloads and 2 billion minutes of phone conversations later, Zennström has shown that he wasn't kidding. But Skype's success has led to perhaps the most difficult chapter yet for the Luxemburg-based company. It now faces mounting concerns over a lack of customer service and a growing backlash by utility regulators as it hunts for new revenue opportunities. Zennström spoke to CNET.News.com about these and other issues earlier this week.

Q: There are a lot of customer complaints about SkypeIn, where you get inbound calls from any phone, and SkypeOut, which is used to call any phone. Is there a problem with it?
Zennström: One thing you have to bear in mind is that the telephone system has been around for 135 years; Skype's been around for 20 months. We are going through all kinds of improvements.

But clearly something is wrong. Customers are fuming about dropped or badly distorted calls. Any changes in the offing?
Zennström: There actually are people using SkypeIn that say it's better than SkypeOut. We are using a new software version for SkypeIn, which we will be gradually introducing into SkypeOut. We are continuously working on it.

One thing you have to bear in mind is that the telephone system has been around for 135 years; Skype's been around for 20 months.

Is that going to solve the problem?
Zennström: We're also adding more carrier partners in order to terminate more calls to traditional phones. That will help. We are also developing lots of new ways to correct errors in the traffic. I think we will continue to see improvements in quality.

These are quality of service problems Skype can address. But Skype can't control the quality of someone's broadband connection, which has a direct impact on Skype calls.
Zennström: We've identified a list of things we can do. But in cases where people are on a badly congested Internet network, that will have an impact on quality. But you're starting to see multi-megabit, per-second connections. In many places, Sweden for example, you can buy a 24mbps line here, and you'll start seeing that in a lot more places.

Your proprietary software has come under fire from those Net phone interests advocating open-source Session Initiation Protocol. What's Skype's SIP stance now?
Zennström: We've been using SIP to interconnect SkypeIn and SkypeOut calls to the (traditional) public switched telephone network (PSTN) since July. Second to Yahoo Broadband in Japan, we're probably one of largest SIP traffic generators. But doing anything beyond that? We think that SIP is not very good for end users.

But by using your own coding, don't you have trouble as a result interconnecting with the huge percentage of other Net phone operators that use SIP? Isn't Skype essentially walling in its users?
Zennström: Our position is that over time, we expect to interconnect to voice over Internet Protocol (VoIP) networks directly, rather than using SIP and the PSTN.

The Federal Communications Commission recently said that Net phone operators must add 911 accompanied by a caller's location and call-back number. Will Skype comply?
Zennström: We believe the FCC decision is not directly applicable to Skype. But we feel that enhanced 911 services are a serious matter, and we're working through various industry organizations to edge the industry into offering not just 911, but all kinds of IP-based emergency services.

We believe the FCC decision is not directly applicable to Skype.

So at some point in the future, you feel Skype needs to add 911?
Zennström: Yes, but to what degree we don't know yet.

What are these new IP-based emergency services you're talking about?
Zennström: If there's a burglar in my home, maybe I send an e-mail or a text message to the police instead of making a call.

But you're focusing on the future. What about now? Could Skype meet the FCC mandate?
Zennström: With regards to location information? It's impossible for anyone like ourselves to supply that information. It's not technically feasible.

What's the problem?
Zennström: We have no knowledge of the geographic location of anyone's IP address.

If asked to comply, how could Skype do it then?
Zennström: There needs to be a database which maps IP addresses to geographical locations. There are some out there now doing geo-mapping, but the databases are not exhaustive enough.

Skype has indicated its next hardware effort involves essentially making mobile Skype phones. How's that effort going?
Zennström: We're working with several manufacturers, like Motorola, on things like a Wi-Fi handset. You'll also see handsets that can get Skype calls over Wi-Fi or cellular networks.

What's the rationale for a wireless operator to sell such a handset? Doesn't it eat into their profits every time somebody uses Skype to make a call instead of their network?
Zennström: The operators make money off a Skype call because Skype calls will run over their networks. They get the traffic.  

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