Will the Internet Kill the Phone Business?

Abstract:

Voice over Internet Protocol (VoIP), is threatening the business models of incumbent telephone service providers. VoIP allows people to make free calls to other Skype users over the Internet, and very cheap calls to traditional telephones. The threat of VoIP looks more real than ever, following eBay's acquisition of VoIP's leading proponent, Skype for US$2.6 billion. eBay plans to use Skype's technology to make it easier for buyers and sellers to communicate, and to offer new "click to call" advertisements. Although US$2.6 billion seems a vast sum to pay for a small company yet to turn a profit, eBay has not been the only company interested in buying Skype.

Microsoft, Yahoo!, News Corporation and Google have all considered the idea. Whatever the merits of the deal, the acquisition of Skype has highlighted the significance of VoIP, and the enormous threat it poses to incumbent telecom operators. Do the rise of Skype and other VoIP services mean the end of the traditional telephone business, established over a century ago? Do the traditional telecom service providers have a chance at all of surviving?

Contents:

Keywords:

Voice over Internet Protocol (VoIP), VoIP services, Skype's technology, eBay, Microsoft, Yahoo!, Acquisition of Skype, Niklas Zennstrom, Janus Friis, Cable operators, Mobile operators, Vodafone

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