EBay promises free phone calls

The price of phone calls will 'come down to zero'

With voice communication moving to the internet, phone calls will become free within four to six years, eBay chief executive Meg Whitman predicted during a conference call about the company's latest financial quarter.

Whitman made her remarks in response to a comment questioning the reasoning of eBay's €2.1bn acquisition of VoIP provider Skype, which the company closed last week.

"The price that anyone can provide for voice transmission on the net will come down to zero," said Whitman.

"The ultimate monetisation method of voice communications on the net changes from revenue per minute to being based on the size of the ecosystem."

That 'ecosystem' is a combination of users and developers who use the Skype platform and are attracted to it because of the quality of the service and the size of its user base.

EBay plans to make money by selling premium services, and by bundling Skype with its existing services.

In the future users will be able to pay for Skype services directly out of their PayPal accounts, for instance. They currently have to make separate payments.

EBay also said that it plans to introduce a service targeted at estate agents, car dealers and the services industry. The service would allow them to receive telephone calls from prospective customers, for which eBay would charge a per call fee.

Skype announced that it will generate about $60m in revenues this year, expected to grow to more than $200m in 2006.

The company currently makes money by handling telephone calls to regular phone numbers, and by selling premium services including voice mail and custom ring-tones.