17 October 2005

eBay plunks down $2.6 billion for Skype

A few months ago I heard a reference to "Skype," something I had never heard of. I looked it up and wrote what I knew:
This is a software that allows one to use an internet connection to make telephone calls. People who are "Skype-enabled" can therefore call each other long distance for very little. The software is downloadable for free, and I paid a visit to the "Skype Journal" expecting to encounter a field of Astroturf. In view of the market for calling cards to Eritrea or Bosnia (where I live), I would expect everyone to be using this.
(That passage, I now realize, encourages the fallacy that I live in Bosnia. I actually live in area with a huge local market for calling cards to those places).

Very often in recent years I've been stunned by the scale of events that I had no inkling of:
Forbes: When eBay agreed to plunk down $2.6 billion for Internet phone company Skype (a deal that could exceed $4 billion if certain milestones are met), both companies gave a 78-slide PowerPoint presentation. Several of the slides mentioned upstart company Jyve, which develops applications for the Skype platform


Who will the winners be? Klein sees four areas where companies will benefit from the Skype-eBay combination: hardware, software applications, voice services and personalized Skype content.

Hardware: As more and more people use Skype, there will be much more demand for high-quality USB speaker phones...

Software Applications:Dick H. Schiferli... [of] Pamela-Systems [says] "I had some ideas of adding functions to Skype..." ...PamelaTM allows for such things as call recording, podcasting, e-mail forwarding of voicemails, time scheduling and the personalization of your contact list (the ability to set a greeting and chat reply per contact) ...

Voice Services: ...Tellme provides extensive voice services using VoiceXML. Think of VoiceXML as HTML for a phone experience—that is, it allows audio files to be served to a caller.

Tellme answers roughly two billion VoiceXML calls annually on its network. Applications range from directory assistance (1-800-555-1212) to buying movie tickets (1-800-FANDANGO) to voice activated dialing (using your voice dialing account, you can say, "Call Tom," for example.)

[Megan] Dyer [of Tellme] thinks the Skype-eBay combination will be a catalyst to inspire the development of many VoiceXML applications. That is, a developer can use the Tellme Studio to build the application. “You can then deploy them on Skype,” said Dyer, “and receive revenue for every person that uses the service they've built. A VoiceXML application can be pretty much whatever a developer dreams up.”

Content: Skype recently launched a new service called Personalize Skype, which brings the user rich content, such as ring tones, pictures and avatars. Some of the content partners include American Greetings (nyse: AM - news - people ), Qpass and Wee World...

Cohen thinks we will see much more video content. His company recently launched a Skype video service, which allows for group video conferencing (from two to 200 users). "With video, you can have special effects," said Cohen. "You can create an immersive experience. We have only scratched the surface."

The Forbes article is about 80% apple-polishing, IMO; I think this has more to do with the perception that Skype represents a potentially devastating blow to the established system of telecommunications, along with secured monopoly rents from its proprietary format. Other VoIP providers use standards like SIP and IAX2, which they don't own.

Question to mull over: does this represent creative destruction for cellular+landline long-distance? How are Skype subscribers going to pay out the volume of revenues needed to capitalize all that infrastructure?


11 October 2005

Diplomatic Controversy over Administration of the Internet

Part of the problem of news agencies is that they often equate extremely small bureaucracies with the entire national population. For example, this article in the International Herald Tribune describes a clash between a couple of acronyms (normally used to refer to between 300 and 450 million persons apiece) over the future management of the internet.
Political unease with the U.S. approach, symbolized by opposition to the war in Iraq, has spilled over into these technical discussions, delegates said. The EU and developing nations, they added, wanted to send a signal to America that it could not run things alone. Opposition to Washington's continued dominance of the Internet was illustrated by a statement released last week by the Brazilian delegation to the talks. "On Internet governance, three words tend to come to mind: lack of legitimacy. In our digital world, only one nation decides for all of us."

In its new proposal, the EU said the new body could set guidelines on who gets control of what Internet address - the main mechanism for finding information across the global network - and could play a role in helping to set up a system for resolving disputes.

"The role of governments in the new cooperation model should be mainly focused on principle issues of public policy, excluding any involvement in the day-to-day operations," the proposal said. The new model "should not replace existing mechanisms or institutions," it added. The proposal was vague but left open the possibility, fiercely opposed by Washington, that the United Nations itself could have some future governing role.

The United States has sharply criticized demands, like one made last week by Iran, for a UN body to govern the Internet, Gross said. "No intergovernmental body should control the Internet," he said, "whether it's the UN or any other." U.S. officials argue that a system like the one proposed by the EU would lead to unwanted bureaucratization of the Internet.

Technically, "the EU's" new position also left its negotiating body isolated. Unfortunately, this editorial is pure propaganda. By using "US" to refer to a huge number of irrelevant associations, the authors are absolved from actually dealing with substantiative technical issues. It's rather analogous to rejecting anything Noam Chomsky says out of hand, because he is American too (and therefore an insidious agent of US imperialism). So much easier than actually mucking about reading the man's books.