Skype Not Just Telecoms Bad Boy, CSO Says

By Khali Henderson

Market trends toward mobility, unified communications, fixed mobile convergence and cloud computing stand to change Skype’s value proposition and reputation in the telecom marketplace, said the peer-to-peer VoIP provider’s chief strategy officer, Christopher Dean, in his joint keynote address on service provider transformation Wednesday at the VON Conference & Expo and the Channel Partners Conference & Expo in Miami.

“Skype is no longer just sort of the ‘bad boy,’ disruptive influence in the telecommunications market,” he said. “What we offer is strong opportunities to leverage these trends for operators and their customers.”

The company, he said, is actively seeking partnerships with service providers – wireless and wireline operators and MSOs – as well as OEMs and ISVs and applications developers, to be part of what he calls an “emerging ecosystem.” Skype’s role is to be an overlay of services – audio conferencing, video, desktop sharing, presence, IM, file sharing and more – that drive demand.

One example Dean cited was its relationship with competitive wireless provider Hutchison 3 Group to provide mobile services to its subscribers via the 3 Skypephone with an embedded Skype client. “They use it to differentiate themselves vis a vis their competitors. And of the half a million they have sold, 80 percent are new subs on their network,” said Dean, adding that the value of a new subscriber is anywhere from $500 to $1,500. In addition, he said, these are users that stick around longer, they are more profitable and they spend more with the wireless provider.

“The belief that we are just going to disrupt and consume the voice minutes of the wireless carrier is not true at all,” he said.

Dean conceded that in its markets, 3 is that “attacker” and open to trying anything they can to differentiate themselves, but he claimed the strategy can translate to a more mature incumbent marketplace characterized by a duopoly or oligopoly. “If one of those providers chooses to partner with Skype and build a differentiated solution, it is great way for them to pull market share because this really is a very exciting service – it’s very compelling and it turns out our users are very big communications buyers.”

If the Hutchison business case doesn’t convince, Dean offers another reason to give Skype the benefit of the doubt: Dire predictions about it singlehandedly destroying the international long-distance market have proved false. He said there has been a price decrease of about 7 percent and a volume increase of 13 percent for a net gain of about 4 percent. And according to TeleGeography, Skype represents 8 percent of the international long-distance market.

“We’ve not disrupted the international market at all,” he said. “What we believe we have done is grown the total pie. We believe that people are communicating more because of the functionality built into Skype.”