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eBay, Skype, and the Terrorists
How
to build the largest terrorist communications network in the world!
By: Bruce Bahlmann - Contributing Author (your
feedback
is important to us!)
Created: September 21, 2005
This paper is the product of
VoIP Market
Research
which is available from Birds-Eye.Net.
The recent news that surfaced about eBay's pending purchase of Voice over
Internet Protocol (VoIP)
company
Skype
has numerous implications which make one wonder what the heck was eBay
thinking? This article takes a look at some of the pending implications.
Wondering Who Will Receive the Check?
Skype - the company that brought you KaZaa, is the foundation (management
and technology) of the company that allows you to make free phone calls from
one computer to another anywhere on the Internet. KaZaa's management team,
which architected the file sharing network that maintains the largest
collection of outstanding subpoenas by the Recording Industry Association of
America (RIAA), is on the verge of becoming one of the largest Internet
purchases thus far in the new millennium. What will be even more interesting
then the final purchase price is who shows up to receive the check?
Thus far, the Skype team has been hiding out of public's eye. Their
previous operation KaZaa, which is arguably one of the best magic shows
since Enron, has carefully distributed the design of the company's
organizational units to confuse and distance its business activities from
its owners and technical architects. Like Enron, Skypes owners are masters
of deception in the way they have unbundled and scattered the operational
components of KaZaa around the globe to thwart off even the most powerful of
enemies and in doing so have also maintained a very low profile.
However, if Skype's management team signs the check or is around to cash
it, either this event or the follow-on trail of money may finally be all
that RIAA attorney's need to find these individuals and issue the pending
subpoenas. Who knows, perhaps the RIAA should be helping eBay in an effort
to finally let justice be served.
Who is Liable?
The fact that Skype is an under cover operation is not as alarming as the
fact that its underlying technology (built upon the mirror image of KaZaa)
is potentially being put into the hands of a public company exposing eBay's
shareholders to yet unknown liabilities. The recent Grockster decision is
just the beginning of the end of free, unmanaged, and unprotected file
sharing of copyrighted material. Similarly, the ability to make free,
digital quality, unregulated, un-interceptable, un-tappable telephone calls
anywhere in the world may seem too good to be true because, frankly, it is.
In the case of Grockster, they were told by the US Supreme Court to pull
the plug. While Skype is unlikely to have a similar fate, its business
practices ruffle similar feathers - if not legal (copyright & RIAA) than
worst (governmental - the single largest 800lb gorilla in existence).
Similar to the RIAA losing billions in lost revenues, governments are also
spending hundreds of billions of dollars upgrading their national security
and fighting global terrorism. Meanwhile private industry is digging
trenches underneath these new funded security measures in the sprit of
innovation and compromise some very expensive good intentions. If we could
all forget 9/11, Skype would be another Internet darling. However, in light
of 9/11 Skype will become a menace to the global telecommunications
industry. Not because of its innovation, but rather because of its blatant
disregard towards working in cooperation with local authorities needs to
access telecommunications systems and records. If Skype lives up to being
anything like KaZaa, the three stakes are already in the coffin for its fate
before it will ever be sold. Perhaps even Skype management sees this coming
and would rather unload this hot potato before their past catches up with
them. In the mean time, Skype is seen by many as "the biggest terrorist
communications network in the world" and soon its management could reside on
US soil - should eBay get the green light.
In the US, all VoIP service providers
are being "strongly encouraged" to reconfigure their services for compliance
with the Communications Assistance for Law Enforcement Act (CALEA)
and Emergency 911 call support. While this is considered "optional" the VoIP
services that don't support it now days face uphill revenue challenges in
competing against those that do. CALEA is child's play for traditional phone
company VoIP offerings to adhere, but a complete nightmare for non-regulated
broadband VoIP providers. For all we know the next major terrorist attack is
probably being planned and coordinated through unregulated technologies such
as these so if broadband VoIP wants to be more than a "toy" or above low
quality AM-type fidelity, it must adhere to the same legal compliance as any
other major telecommunications carriers. The height of such hurtles for an
Internet startup without an official place of business goes beyond
comprehension.
Why Skype?
When you think about it, eBay had lots of choices rather than Skype. In
fact, if Skype was any other company with any other history, it would be
worth easily twice its discounted bad-boy price. Still, eBay faces an uphill
challenge to turn the Skype purchase into a cash positive venture. Moving
Skype from free to a fee-based service will not be easy, nor will navigating
the numerous pending legal, regulatory, and technical challenges it faces in
becoming a legitimate telecommunications provider. Unfortunately, eBay is an
online banking (via PayPal) and ecommerce site with literally no
telecommunications experience. Over night, they are thinking of buying their
way into the telecommunications business via the Skype purchase. This has
all the makings of AT&T buying their way into the Cable Television business
by buying TCI and MediaOne to create the largest US cable company. Only it
didn't work out for AT&T because top level management never understood how
to make it in the cable business without sacrificing their other core
businesses, years and millions spent later they sold it on the cheap to
Comcast who has since taken these assets to all new heights. A similar thing
will happen to eBay, Yahoo, and the like who try to take what they know
about running business on the Internet into becoming telecommunications
providers. My best advice to them is - pick one thing to be good at and then
stick with it.
There is no such thing as a multi-dimensional portal for all your
telecommunications, banking, shopping needs. While it seems like a logical
thing to aspire to do, people just won't buy it. Neither will the regulators
which are going to have a field day with all the Skype regulatory issues
should this purchase come to pass. I estimate that by the time eBay turns
Skype into a world wide legitimate telecommunications provider, it could
have easily bought AOL (which arguably fits better into its core business)
outright and turned its instant messenger into an even better
telecommunications system. AOL has a much better and much more trusted brand
and would yield a shorter road to return on investment. Remember that the
Internet largely consists of novice users who are suspicious of things that
look to good to be true. While Skype easily won the Internet techies over,
by the millions, you would be hard pressed to find any of those techies
willing to shop over a Skype line - even fewer would be willing to pay for
it. Similarly, it will be interesting see how successful Skype will be able
attract the same numbers of new subscribers when they become a fee-based
rather than a free service - especially as its lack of support for CALEA and
its insistence on not officially hanging a shingle on an official place of
business begins to worry law makers and federal governments.
It is a sad day for eBay and its shareholders who are staring at a
monster task at spinning Skype into a profitable extension of its growing
business. Well, this deal is far from done and shareholders will have the
last say before it is over.
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