I recently red the article “Skype’s Payday” in this
week’s Red Herring and was so amused by the article I had to write about it.
Beneath are my rumblings.
“This time, it’s perfectly legal”
A classic statement to open the article which consists
of a question and answer session with the Skype CEO, Niklas Zennstrom – it
is just too bad that it wasn’t asked as a real question. Is it legal to
provide global communications? Well, let me see. I can send an email for
free to any person around the globe - so because of this fact is must be
legal, right? Evidently, that is the basis for the conception of Napster,
Kazaa, and now Skype – does that mean it is legal? Well, it worked before,
didn't it? Skype believes they can build and maintain a private global
communications network over the top of the existing broadband service
infrastructure, sell premium voice services on this network, and yet not be
subject to any laws that govern other telecommunications providers –
certainly their aim is not to
pay homage to franchise agreements and taxes imposed on these
telecommunications providers. Is this legal? If it is, what does that say to
legitimate telecommunications companies that do pay taxes and respectfully
negotiate franchise fees – perhaps they are paying too much for taxes and
should demand federal and state governments to cancel such anti-competitive
measures? What would such repercussions be? What if those repercussions were
that the annual taxes you and I pay would go up just so that companies like Skype
can have a fair play at the global telecommunications market? All other
telecommunications providers pay including cable, telco, mobile, satellite,
wireless, but not Skype - it is different, right?
The rate of consumer adoption is an interesting historical benchmark to gage
questionable behavior. If the rate of consumer adoption of something looks like Napster,
then one should question it as such. Similarly if the rate of consumer adoption looks like Skype
then something is equally fishy. Look at any other roll out of
legitimate, highly desirable technology. Nothing else looks quite like
Napster or Skype, because they are not normal.
“Skype is more of a complimentary service than a
replacement service”
Really, well then what exactly is Skype? Skype tries to
make a case for it being what it calls a “personal mobile service”. It
sounds catchy, only what does it mean? Answer, it is no different than cable
companies wanting to classify their high speed Internet service as an
'Information Service' so as not to fall victim of regulation and open access
requirements. In the end, if we all stepped back and call an Ace an Ace –
all these linguistic reproductions are truly “telecommunications services.”
Federal governments could save themselves a lot of deliberation and lobbying
if they settled on just one communications playbook for all
telecommunications providers - domestic and abroad.
What is interesting is if Skype were classified correctly by world
governments as a 'Telecommunications Service' they would have to open up to anyone and anything to
be used or exploited – in other
words, they would fall under regulations that they currently don’t observe
and could never observe and in the end they too would become a 'dumb
pipe'. Skype does not have a physical presence within the areas they are
trying to serve, they don’t own the customer or the last mile, and basically
only maintain a small piece of software and some partnerships. It is like
saying FireFox or Netscape is a telecommunications service. Only, while
these too are just applications they differ significantly as they empower
users to access any Internet site. Skype is a proprietary network that is
dependent on broadband Internet access to work.
Skype will never be anything more than a
secondary line
service that one has in addition to one's primary line service. Only how does one know
which is which? If you have a two-line house and you forget to engage your
primary line before you dial 911 what will you get and who is responsible if
you don’t get what you would expect? If Skype is anything like the CEO’s
previous accomplishments, dialing 911 on its network will get you the run
around. Skype and its CEO are more geared and experienced to challenge and
disrupt our current conception, ideals, and regulations around
telecommunications than solve real world problems for real people – that is
why they don’t want to talk about adhering to regulations. Until we figure
out this current 'Skype loop hole' and rewrite telecommunications laws that
are universally and globally fair, we open ourselves to confusing choices
such as Skype. Oh, but I forgot, Skype is not a 'Telecommunications Service'
so why would anyone ever have a two line phone in their home where Skype
is the second line. Rather, Skype is simply a “personal mobile service” – a
nebulous little toy service that you engage when you want to make free phone
calls around the world. Nothing life threatening or critically important
ever flows over this covert, unregulated, and un-taxed telecommunications
system. I’m sure Skype would vouch for that.
While this may work in a world still new to the
legalities of free Internet trade, this 'Skype loop hole' in the definition of
telecommunications has given rise to Skype. Skype like Napster, is only the
first of a host of look-a-alike exploiters of this loop hole in current
federal regulations. Skype is even claiming to play fair and be legal, but
if a company like Kazaa can quickly rise up in the aftermath of 'Nice
Napster', what is there to prevent an even better, more devious model from
replacing the likes of a 'well behaved Skype'.
“we’re helping telcos sell broadband connections”
Interesting, the Skype site doesn’t advertise for BT,
Verizon, Comcast, or Time Warner broadband services so I’m not sure how
Skype is helping sell more broadband connections. In fact, if this is the
case why does Skype advertise their minimum connection speed as 56k if they
really promote broadband connections? Don’t worry Mr. Zennstrom, you needn’t
hype about your helping telco’s and cable operators selling more broadband
connections. Forbes and Red Herring may believe your hype, but they are just
the uninformed media. Serious communications companies see these claims for
what they really are.
I look at Skype the way that cable companies probably
look at Netflix. Netflix allows cable subscribers to down grade to a very
minimal programming package (like basic or extended basic) and then
subscribe to Netflix for premium movies through their Internet mail order
rental business. At least while Netflix is taking away the cable company
profits from its premium customers it isn’t exploiting its data services in
the process – at least not yet. Skype is doing just that to both cable and
telephone companies. Only it is playing with fire from the standpoint of
regulatory agencies. Telecommunications are regulated and the proceeds from
taxes on these regulated entities fund federal, state, and local government.
If taxes collected on these sources go down, guess what happens? I wish I
could say that government has layoffs and cutbacks, rather taxes go up. So
what benefits Skype through it exploiting a loop hole in regulations, ends
up costing you and I more in the end – regardless of whether we are Skype
subscribers or not.
My Conclusions...
Yes, I’m afraid the only thing that Mr. Zennstrom is
good at is challenging the world’s perceptions of the usefulness of
telecommunications. His first creation was a simple copy of Napster but in a
masterfully devious organization aimed chiefly at avoiding certain
prosecution of a growing awareness and concern over the illegal distribution
of copyrighted material.
Skype, is no stranger to deception either but this time
instead of taking on MPAA or RIAA, Mr. Zennstrom faces certain
wranglings with federal governments around the world. Only this time they
will come at him with a lot more than a few measly subpoenas. Like Napster,
which exploded on the scene due in large part to a deal that was too good to
be true - free copyrighted music. Skype has also exploded on the scene with
an equally obscene deal that is too good to be true – free telephone calls
anywhere in the world. While governments are slower to react than greedy
musicians, Skype’s destiny lays not far from the tree as that of free-for-all
file swapping companies. Just because it is great and everyone loves it
doesn’t mean it is worth anything or that it has a future. If eBay goes on
to purchase Skype, I’ll be curious as to how it plans to explain to its
shareholders when hype (sorry, I meant Skype) fails to hold its weight
against the looming onslaught of regulations.
Check out these other Birds-Eye.Net papers/products regarding
VoIP:
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