Skype Is a Giant in the International Phone Market

By Josh Long

Skype, the Internet-based calling sensation, is morphing into a leviathan in the international phone market.

TeleGeography Research estimates the company accounted for roughly one-quarter of the estimated 413 billion minutes of international voice traffic last year.

But TeleGeography analyst Stephan Beckert said the comparison is a bit of apples to watermelons” because the 102 billion minutes of traffic that is attributed to Skype did not touch the public switched telephone network, otherwise known as the PSTN. 

Still, Beckert said, the growth in Skypes international calling is astonishing.”  

But the analyst said U.S. telecommunications companies have little reason to fret about Skype squeezing their revenues. In developed countries like the United States, international revenues comprise a minute fraction of the overall revenues of a telecommunications provider like Verizon Communications, Beckert said. 

Im sure Verizon is much more concerned about competition from Comcast, Cablevision and Sprint than they are from Skype,” he said.

Given Skypes popularity, its little wonder some of the industrys biggest players like Verizon Wireless a joint venture of Verizon Communications and Vodafone have cozied up to the Luxembourg-based Internet calling pioneer.  

At the International Consumer Electronics Show this week in Las Vegas, Verizon Wireless and Skype announced a product that will allow people to make Skype-to-Skype video calls over Verizon Wireless 4G network. The companies announced that Skype mobile with video” will be integrated into a variety of 4G smartphones that will be available by the middle of the year.

Skype this week also announced an agreement to acquire Qik, a provider of mobile video software and services. 

Redwood City, Calif.-based Qik enables mobile phone users to share videos.

Founded in 2003, Skype has risen to prominence thanks to a software-based communications platform that allows people to connect with each from all over the world.

By downloading the companys software on a computer, Skype members with an Internet connection can talk to each other for free.

In October, when Skype appointed Cisco executive Tony Bates as its new CEO, the company noted that it had 560 million registered users. Of that total, around 124 million individuals actively connect to Skype each month.

Skype also supports paid subscribers who can place calls to and receive calls from mobile and fixed telephone lines.

In November 2009, eBay sold a 70 percent interest in Skype to an investor group in a deal that valued the company at $2.75 billion. Several months later, Skype announced plans to go public through an IPO. In a filing with the Securities and Exchange Commission, Skype disclosed that it brought home net income of $13.1 million and net revenues of $406.2 million during the first six months of 2010.

But only a small fraction of Skypes connected users are paying subscribers. 

During the three-month period ending June 30, 2010, paying users represented roughly 7 percent of the companys connected members, according to an SEC filing.