Since its formation in 2003, London-headquartered Skype has recorded over 54 million downloads of its VoIP software.
The application is best known for its ability to let users within the Skype network make voice phone calls for free, and offers ruthlessly aggressive rates on calls from computers or handhelds to phone numbers across the world.
The service also offers presence awareness, instant messaging and file transfer. vnunet.com spoke with the company's 38 year-old chief executive and co-founder Niklas Zennström.
What made you think that Skype, and the idea on which it was built, would make for a viable company back in 2003?
As people got more and more broadband connections than dial-up accounts, we realised that the client/server model on the internet didn't work anymore. If you could establish a distributed network it would be much more efficient to transport all kinds of data between end users. Myself and [co-founder] Janus Friis had a vision of a self-organising peer-to-peer technology.
At the time we thought it strange that VoIP was not more popular than it was. But existing VoIP technologies had lots of problems and it was difficult to get them to work, if you could get them to work at all.
Peer-to-peer technology could solve that problem. Obviously, that was a huge opportunity because, as you get more broadband connections, it would be more natural to use an application to replace a telephone. That would be much more cost-efficient and much less of a problem.
The established telecoms companies are lobbying to subject VoIP providers to the same regulations as landline companies. Does that worry you?
The worst thing that can happen is that you have to comply with the same type of regulations [as landline providers]. I don't think that will happen, but you'll have to comply with emergency calling and wiretapping.
Regulators are looking into different classes of VoIP providers, such as AT&T Call Vantage, Verizon and Vonage. They are providing a straight-on telephony service where you plug in your telephone and you have a traditional phone service over the internet. That's a landline replacement. Skype is a personal service: you can bring it with you wherever you are. If I'm travelling to Beijing, I can bring my laptop and plug it in.
Will you ever provide a landline replacement service instead of a PC based service?
That's not our plan. The telephone service is over 100 years old. The reason we are using new technologies is because we are also providing new types of services, not replicating or mimicking the old services. We use those technologies to create new services that are much more user friendly.
Do you consider VoIP providers like Vonage as a competitor?
Not really. We are suggesting that Skype is the personal communication service users can use in addition to their phone line. What Vonage does is the same as traditional telephony.
We are offering a personal mobile communications service which comprises IP voice communications, instant messaging and file transfer. Voice communication is part of our offering, but not everything.
Over 90 per cent of our users are using Skype for IP communications. Vonage users are using 100 per cent for traditional telephony communications. It's a very different usage.
Still, you partner with Siemens to offer Skype enabled handsets. To the end user that looks a lot like the Vonage offering. Why is Skype different?
The great benefit of Skype is that it is independent of what devices or network you have. People will use different types of devices to access the Skype network. Siemens is marketing a cordless phone that uses Skype, so you can use Skype with the telephone. If you want to use a [mobile] smartphone, you will be able to do that. Different users will use different platforms.
The great difference with the AT&T Call Vantage service is the mobile service. You can have a computer at home with a Siemens handset. But if you also have a PDA and you happen to be travelling in Amsterdam, the Skype service will ring on your PDA in Amsterdam.
What can we expect from Skype in the future?
You will see Skype on mobile devices so you can use it from any type of wireless network. When wireless broadband internet becomes ubiquitous, you are able to use that for voice communications wherever you are. To do that you use any electronic mobile device: a PDA, smartphone, laptop or any other.
In the next years we will announce new partnerships with telcos and hardware manufacturers. We also plan to introduce value added services such as voicemail and the SpypeIn service where Skype can receive calls from the telephone network.
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