Another Day, Another Analyst Warns About The iPod

Skype's Free Calling Promo Ends, And Now The Hard Work Begins

from the mr-telephone-man-there's-something-wrong-with-my-business-model dept

Wed, Dec 13th 2006 7:31am — Carlo Longino

Earlier this year, Skype announced that all outgoing calls to the US and Canada would be free through the end of 2006 in a big promotional push to try and attract users, but also an inevitable result as the cost of voice service trends towards zero. Skype has now released its pricing for after the promotion ends, and it will charge $30 per year for unlimited US and Canadian calls (with early subscribers paying just $15). Skype's free calling offer didn't seem bound to last indefinitely, and $30 per year for unlimited outgoing calls to North America certainly isn't a bad deal -- but when you're in a price war, it's awfully hard to successfully raise your prices. Will users start paying for the previously free services? While Skype is still cheaper than many other voice services, it also carries a lot of strings, in particular being tied to a computer, unless users shell out for a standalone VoIP handset, which are still pricey and by some accounts don't work very well. While a Skype exec says the company's revenue are back up to the same levels as before the free calling promo, there's still a lot of skepticism about Skype's success as a business. Getting blocked around the world doesn't help, but Skype's basic problem is much more fundamental: will enough people pay for its services?

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17 Comments

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Sanguine Dream, 13 Dec 2006 @ 7:43am

As long...
Skype doesn't go the route of the traditional telcos and start throwing around a bunch of hidden fees and charges that will double that $30/yr. they should be fine.
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Keonne Rodriguez, 13 Dec 2006 @ 7:54am

Orly?
I am one of the few that actually use Skype as my only form of telephone.

While it is true that you are tied to having the computer in front of you, you can always have your calls forwarded to your mobile phone when you are out of the house.

As of now, i havent had a problem at all with Skype. Using SkypeIn I am able to buy phone numbers around the world, which is useful seeing as I am an American living abroad who likes to keep in touch with family and friends.
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Revrendmaynard, 13 Dec 2006 @ 8:22am

Gizmo!
I prefer Gizmo Project over Skype. Gizmo uses standard SIP for communications while Skype uses a closed, proprietary system.
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Erick, 13 Dec 2006 @ 8:27am

Caller ID
I am trying to live off of skype and cell phone alone, but I discovered my own family actually watches the Caller ID like a hawk. I'm starting to ponder if I should shift over to Vonage, because at least they offer it.
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STJ, 13 Dec 2006 @ 8:45am

I did use Vonage, loved it, but when I moved, the new complex blocked it.. So I had to look for something new, Skype seems the next best thing
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Anonymous Coward, 13 Dec 2006 @ 8:46am

Re: Caller ID
Get a new family.

Admittedly my family is similar but recently they have noticed that my name at least appears on Caller ID when I dial from Skype. Although this could be a consequence of puschasing a SkypeIn number? Any guesses?
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del taco, 13 Dec 2006 @ 8:50am

Re: Orly?
I am one of the few that actually use Skype as my only form of telephone.
While it is true that you are tied to having the computer in front of you, you can always have your calls forwarded to your mobile phone when you are out of the house. If it's your only form of telephone how are you forwarding it to your mobile???
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del taco, 13 Dec 2006 @ 8:51am

Re: Orly?
I am one of the few that actually use Skype as my only form of telephone.
While it is true that you are tied to having the computer in front of you, you can always have your calls forwarded to your mobile phone when you are out of the house.

If it's your only form of telephone how are you forwarding it to your mobile???
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Venkat, 13 Dec 2006 @ 9:13am

Skype
I'm a huge fan and think people will pay. $30 is nothing to be able to make calls from your laptop or desktop with a click. If you have a USB headset with good coverage it's much preferable to a standard issue cordless.

Also, they made clear from the get go that the promotional freebie was until year end. I was expecting some sort of monthly charge. $30 is a small price to pay.
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Michael, 13 Dec 2006 @ 9:32am

Wheeee
I thought their service was going to have a monthly fee or charge by the minute, as it does when you call other countries. I haven't a cell phone, and Skype is my only way to keep in touch with my offline friends and family. The voice quality is excellent, and I'll gladly shell out $15 for the first year.
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Jack Hansen, 13 Dec 2006 @ 9:49am

Orova should have been funded
There was a company looking to be funded a couple of years ago that, essentially, combined Skype with WebEx and included a really simple but easy-to-use whiteboard solution. They were looking to charge $95/year for unlimited usage. I saw their prototype and it was rough. But, conceptually it was a great idea. No VCs would touch it and it disappeared. Too bad.
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Anonymous Coward, 13 Dec 2006 @ 10:43am

Skype will succeed.
I already signed up for the $15 a year plan. I love it. I was using Skype Out long before the free promo and I'll continue to use it as often as I can.

Between it and my cell phone I have no need for any normal phone line. I've got the skype in hooked up to a portable phone system for the home and I've never had any problems. The sound quality is better than my old pots line and I've never once had the all circuits are busy that I used to get.

Skype may not flourish as well as a normal telco company, mostly because they haven't bought off all the politicians and the fcc, but I have no doubt that they will make money.
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Chuck Norris' Enemy (deceased), 13 Dec 2006 @ 11:12am

Re: Re: Orly?
He didn't say that he forwards, he states that one can forward.

Thirty bucks a year is still a fantastic deal. Telco's will charge you that in one month for long distance.
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Anonymous Coward, 13 Dec 2006 @ 11:30am

Skype peripherals are the winner
The attraction of Skype is the huge range of peripherals that push it far ahead of its rivals. The new DualPhone 3308, for example, let's you make Skype calls without a computer and hooks up to your landline too. That's a pretty compelling combination, and it works well! http://tinyurl.com/yzssve .
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Oliver Wendell Jones, 13 Dec 2006 @ 12:32pm

Skype Handsets
I bought a Skype handset at a local Radio Shack that was going out of business. It looks a lot like a regular phone but it plugs into a USB port instead of a phone jack.

I used it for a few months for all my long distance calls before I switched to my cable company's phone service, now I get unlimited long distance included.

The call quality is quite good and except for the funky number showing up in Caller ID, most people can't tell you're not calling from a regular phone.

I wouldn't mind paying $30 per year if it includes an incoming phone # as well, especially if I could get a phone # from a different area code (as you can now) so my family could call me "locally" instead of long distance.
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Anonymous Coward, 13 Dec 2006 @ 12:46pm

I'd use a VoIP service... I would but I just don't think the emergency features of VoIP are up to scratch across the world.
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cf, 21 Jan 2007 @ 9:02pm

Re: Skype will succeed.
You said you have your skype hooked up to a "portable" phone system. How did you get skype to recognize it?
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