The continuous alarm bell for telcos

BBC News interviewed Niklas Zennstrom, the CEO of Skype, on Friday. The wide-ranging interview includes commentary on Zennstrom’s early venture with Kazaa and discusses Skype and its impact on traditional telephone services.

The most interesting part of the interview:

[…] He believes Skype will take away revenue from phone calls, which is the bulk of the revenue for phone companies. "That will go away in the future – all phone calls will be free. That’s obviously an issue for them. On the other hand, Skype, just like Kazaa and other software, are encouraging people to buy broadband connections. Today, less than half of the population has broadband. This enables the phone companies to sell broadband to the other half."

As for the future, Zennström says Skype is a long-term project. "We have just started, and if you compare the number of people using Skype to the number using a telephone network around the world, we’re still just starting. And now we’re also very much focussing on moving away from the computer into mobile devices, so you can use Skype for free wirelessly."

And there’s the continually-sounding alarm bell for the telcos – if they can’t move quickly and effectively with VOIP (and, clearly, they can’t), service providers like Skype will continue to disrupt their markets. Just look at some Skype numbers so far, including 10 billion minutes of phone calls. Then there’s video conferencing with tools like vSkype.

It looks as though most telcos still don’t see what’s happening around them. Can that really be true?

BBC News | How Skype and Kazaa changed the net