Media Case Study 2: Skype

Skype is a multi-platform application primarily used on Windows, OSX and Linux which allows users from all over the world to phone each other for free with as little equipment as a microphone, a computer, the Skype program and access to the internet. Skype offers crystal clear phone calls (with the right equpiment, of course), and for absolutely free (providing the call is to another Skype user on a computer). It is also possible to phone non-Skype users on landlines and mobile phones, however this costs a small price and is available in offers similar to a mobile phone network – Pay as you Go and Pay Monthly.

THE HISTORY OF SKYPE:

Skype as it is known today started development in 2003, being first released in the August of 2003: the Skype Limited wikipedia page says this about the company’s history:

Skype was founded in 2003 by Niklas Zennstrom and Janus Friis, whose main intention was to develop a piece of software which would revolutionise telephone calls. Allowing users to speak to each other via computers promotes the use of the Voice over Internet protocol and the use of computers in the technologically advancing world. Users are able to talk for free, an incentive to future and present members.

Zennstrom himself started a professional career at telephone operator Tele2, before co-founding Altnet, the world first secure peer to peer networking platform which promoted commercial content to potential consumers. Interestingly, both also developed the popular p2p downloading platform Kazaa, which has faced major controversy due to the ability to breach copyright by downloading songs illegally from it. These programs were precursors to Skype itself, which used previous technologies the duo had developed in order to revolutionise the options both home and business users had to contacting each other by voice. The partners then sold the Skype technology to eBay, before going on to found Joost, an online platform for streaming video – clearly the pair are pushing the forefrounds of the user demand’s of the capabilities of the internet.

VOICE OVER INTERNET PROTOCOL (VoIP):

The technology that Skype uses in order to create a telephone network over the internet is called VoIP (or Voice over Internet Protocol). The wikipedia page goes into greater depth with the technology used, however the key strengths of VoIP are listed here:

• The ability to transmit more than one telephone call over the same broadband connection. This can make VoIP a simple way to add an extra telephone line to a home or office.
• Conference calling, call forwarding, automatic redial, and caller ID; zero- or near-zero-cost features that traditional telecommunication companies (telcos) normally charge extra for.
• Secure calls using standardized protocols (such as Secure Real-time Transport Protocol.) Most of the difficulties of creating a secure phone connection over traditional phone lines, like digitizing and digital transmission, are already in place with VoIP. It is only necessary to encrypt and authenticate the existing data stream.
• Location independence. Only an Internet connection is needed to get a connection to a VoIP provider. For instance, call center agents using VoIP phones can work from anywhere with a sufficiently fast and stable Internet connection.
• Integration with other services available over the Internet, including video conversation, message or data file exchange in parallel with the conversation, audio conferencing, managing address books, and passing information about whether others (e.g. friends or colleagues) are available to interested parties.
• Advanced Telephony features such as call routing, screen pops, and IVR implementations are easier and cheaper to implement and integrate. The fact that the phone call is on the same data network as a users PC opens a new door to possibilities.

The main advantages of the system clearly show that Skype is offered as an alternative to regular phone calls, even as the successor – the advantages of being on a digital system are that updates and fixes to the system are easy to implement, more features are easier to implement and are more likely to be more widely used, and the main reason is that despite all these features, it’s all no cost or very low cost. Disadvantages, of course, it that the protocol is on a digital platform – a digital platform leaves it easy suspectible to secruity exploits, wiretapping, and general system failures which couldn’t occur with a normal telephone network.

THE COST OF SKYPE:

For the most part, Skype is a free system; the program is free, the calls to other skype users are free, video calls are also free. In fact, the only component of the program which needs to be paid for are calls to phones on landlines or mobile phone networks. The exact pricing plan is here:

Skype-to-Skype calls	Free
Transfer calls to people on Skype	Free
Video calls	Free
Instant messaging and group chats	Free
Conference calls with up to nine people	Free
Forward calls to people on Skype	Free
Call phones and mobiles	From £ 0.012 per minute² – See rates Buy Skype Credit · Save with a subscription
Receive calls from phones and mobiles	£ 10 or £ 35 (3 or 12 months) Get SkypeIn · Save with a subscription
Send and receive voicemails	£ 3 or £ 10 (3 or 12 months) Get voicemail · Save with a subscription
Skype To Go number	Available only with a subscription.
Forward calls to phones	From £ 0.012 per minute² – See rates Buy Skype Credit · Save with a subscription
Send SMS messages	From £ 0.026 See rates · Buy Skype Credit
Transfer calls to phones and mobiles	From £ 0.012 per minute² Available with a subscription at no extra cost.

As you can see, the prices are relatively small. We can compare these costs to a typical mobile phone provider (using O2’s Pay & Go pricing plan):

Standard calls1	25p/min for the first 3 mins/day then 5p/min for the rest of the day
O2 mobiles	as Standard calls
Other UK network mobiles	25p
Video calls	50p
Text message2	10p per message
Picture message3	25p per message
Voicemail 901	15p per call
WAP via 915000 or +44 7712927927	10p
Browsing4	£3 per MB

Of course, a big advantage is that features that mobile phones have you dish out money for are standard on a computer – browsing the internet is free, as is sending other users emails (which are longer and more convinient than text messages),  video messaging, sending pictures et cetra. Skype adds phone capabilites to these features which of course excel over a mobile phone as they have been developed over years on the computer. The pricing of calls to any phone which isn’t Skype is also comparitvely cheaper than that of normal telephones, theoretically being more appealing than a normal phone.

WHO CAN USE SKYPE?

As of 2008, the user figures look like this:

Date	Total user accounts (in millions)[36][37][38]	Skype to Skype minutes (in billions)	Skype Out minutes (in billions)	Net revenue USD (in millions)
Q4 2005	74.7	N/A	N/A	N/A
Q1 2006	94.6	6.9	0.7	35
Q2 2006	113.1	7.1	0.8	44
Q3 2006	135.9	6.6	1.1	50
Q4 2006	171.2	7.6	1.5	66
Q1 2007	195.5	7.7	1.3	79
Q2 2007	219.6	7.1	1.3	90
Q3 2007	245.7	6.1	1.4	98
Q4 2007	276.3	N/A	N/A	115
Q1 2008	309.3	14.2	1.7	126

Over 300 million people use Skype at the moment, and this figure is growing increasingly rapidly. A key component of this is that Skype is available on many, many different platforms:

• Windows
• Mac OSX
• Linux
• Windows Mobile
• WiFi Phone
• Cordless Phone
• 3 Skypephone
• Nokia N800/N810
• Palm OS (Opening up a lot of PDA/Smartphones)

Not only is Skype available for pretty much every home operating system (Windows, Mac OSX and Linux collectively account for over 99% of all personal computers), it is also available for wireless platforms – this is key for the continued growth of Skype. If it was not available on handseld systems such as the Nokia N800 and the 3 Skypephone, then it’s growth would be limited to households and it would be unable to break ino the lucrative mobile phone market. New Media Technologies crucially are becoming wireless, free of the house and more openly available to use in everyday life outside – one example of this being streaming video for phones through WiFi. Skype hits that gap in the market by offering a free telephony alternative to the ordinary and making it available for everyday phones – increasinly so with the compatibility with Palm OS and Windows Mobile, which collectively runs most phones (at least, most Smartphones) and pretty much all PDAs on the market at the moment and recently.

WHAT OTHER FEATURES DOES IT HAVE?

Besides the obvious features Skype boasts which have already been covered in this study (Calls, Video Calls, Conference Calls), it also has a large number of useful features which further cement it as a good alternative to ordinary telephones. A full list of these is available on the features of Skype wikipedia page, however here are the key ones:

• SkypeOut
• SkypeIn
• Skype Voicemail
• Skype chat
• Skype Me
• Skypecasts
• Skype SMS
• Skype web toolbar
• Skype Zones
• Skype history logs
• SkypeFind
• Skype Prime

All are branded with the Skype name, and are an example of one platform converging existing communication technologies on the internet. For example, Skype Chat is a basic IRC program which allows a chat room of up to 150 Skype users to chat simultaneously, showing features of chat programs such as Windows Live Messenger and Yahoo Messenger. Skypecasts are live, moderated conversations between up to 100 people, moderated by a hst who has the ability to mute someone, pass the virtual microphone or eject someone from the conversation. SkypeFind is a user driven community, much like a massive online phone book where you can find anyone you want to who has signed up to SkypeFind and allowed people to find them.

These features, while allowing more freedom on the internet to do what you want to do in regards to community driven expansion and communication, are all also suspectible to the usual downfalls the internet has, however. All talk is uncensored, which probably upsets some mother somewhere. More seriously, Skype is shown to be open to some serious security issues related to how the data is encrypted which would potentially allow someone to listen in, exploit and bring down the network. This in itself is one of the biggest disadvantages of a completely digital server based means of communication – the phonelines always have a backup, and are relatively hard to manipulate and exploit, where digital servers are easier to hack into and bring down – the reliablity of these new networks can probably ever be no where near as good as regular telephony networks.

SKYPE’S INTEGRATION WIH PRODUCTS:

Skype’s logo and brand can be seen tied in with many products on the telephone and communication market, including computer accessories such as headsets or microphones. On the Skype Shop website, all of these products can be seen; for as little as £69.99, a twin set of ‘3 Skypephone’s can be bought, which in turn encourages growth as the second phone is designed to be given to someone who will also join the Skype network. Packs of wireless routers and cordless house phones can also be bought, which not only encourages use of Skype, but also use of other WiFi enabled products in the household such as laptops, games consoles, et cetra. Finally, the Skype shop offers mobile phones with Skype pre built into it as the network provider – this is Skype’s convergence of mobile phone techology with it’s own internet communication technolgy.

IN CONCLUSION:

Skype is a flourishing network, having only been founded 5 years ago. However, 300 million people are signed up to the service (including myself), and this figure is increasing daily. The question is, how will mobile phone and indeed normal phone manufacturers respond to the rising free telephone revolution? Will they embrace Skype and try and converge technologies, much like Skype has already started doing, or will they create yet another alternative to confound consumers? The next few years are crucital for the market’s growth, both economically and on the internet.