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Skype readies business telephone offering

New service will feature expanded conference calling and let users get calls from the traditional phone network.

Skype plans to offer a business telephone service for "individuals and work groups, not CIOs" that the free Internet phone service provider says will shake up another major telephone market.

Winning over business will not be an easy task, Skype co-founder Niklas Zennstrom said Wednesday. Incumbent suppliers of business phone services and equipment fiercely protect customers, who in turn are extremely loyal. Also, why would a business trust its phone network to a start-up such as Skype, which uses new peer-to-peer Net phone technology, has just 60 employees and nascent sales channels?

This will be the biggest test yet for Skype, which after just a year in business has become a big hit with consumers. The company is trying to cash in on the fact that, since its free software first became available, 22 million consumers have downloaded it and made nearly 1.8 billion minutes of calls.

"We can't do all of this ourselves and are looking for partners--resellers, hardware makers, system integrators, consultants--to help," Zennstrom said. "But it's not the big that beats the small; it's the fast that beats the slow."

Zennstrom did not reveal when the business services will be offered and other important details. He did say "Skype for Business" will include Skype's free software to make unlimited calls between Web-connected PCs and some personal digital assistants. There will also be new premium features, including expanded conference calling, SkypePlus voice mail and SkypeIn, with which Skype users can get calls from the traditional phone network.

As for any new equipment that will debut with the business service, phone maker Siemens is already at work on a cordless-phone-like device that will likely be part of the new Skype For Business offers, Zennstrom said. It's also likely that Skype will use the business service to market its existing SkypeOut, in which Skype users can make calls from their PCs or PDAs (personal digital assistants) to the traditional fixed-line phones or cell phones for 2 cents a minute.

Skype uses peer-to-peer architecture, which requires no infrastructure and, compared with phone companies that own their own lines and switches, only minimal capital investment. Rather, Skype's 750,000 daily users create the network on the fly, sharing computer resources to manage traffic flow and ensure call quality. Skype claims its network can grow organically, without the need for the company to add new equipment to support increased traffic demands.

This "network free" concept is unusual, even among Net phone providers, which are already turning the century-old telephone industry on its ear. The concept is also relatively inexpensive; Skype has managed to avoid many of the costs typically borne by Net phone service providers.