Broadband News

It had people scratching their heads back in 2005 as to where the reported ‘synergies’ were and so news that eBay is to dispose of internet telephony business Skype next year is not entirely surprising. It comes at a crossroads for the internet telephony company, however, as it tries to convince mobile operators to allow its application to run on their networks and not just at Wi-Fi hotspots.

The world famous auction site has already admitted the near £2bn it paid for Skype vastly overpriced the service which reports to have 400m users. It recently wrote down the value of the business from the $3.1bn it paid in 2005 to $1.4bn and so the wider financial world was expecting the online auctioneer and etailer would sell the business back to its founders, Niklas Zennstrom and Janus Friis, who had openly expressed their interest in resuming ownership.

However, a float will give eBay a year to prepare Skype and hope the economy improves in the meantime. The announcement could, of course, be a way of publicly turning down an approach by the former founders (if one has been made) in the hope they will come up with a better offer. It would go some way towards explaining the timing which has the online and financial communities very puzzled: why announce in the teeth of a recession you are to float a company that currently generates $500m per year after its revenues leapt nearly 50% in the past twelve months?

Mobile action

The puzzling announcement comes at a crossroads for Skype as it attempts to prove turkeys do indeed vote for Christmas and persuade the mobile operators to let its technology work across their airwaves.

There are two interesting, coinciding developments here. The Skye application for the iPhone has just been unveiled and is already limited, at least in Germany, to working on Wi-Fi rather than on a mobile carrier’s own airwaves. The same is expected elsewhere around the globe as it becomes available.

The mobile operators are claiming that voice over internet protocol (VoIP) technology does not offer good enough quality and the free (Skype to Skype) or very low cost (Skype out) calls offered by the technology would cram its airwaves with too much traffic. The real issue is, of course, the mobile operators do not want to spend billions on their networks only to allow a VoIP provider to piggy back on that investment for nothing, or next to nothing.

Hence Skype is leading a move to get European Union policy makers to force the mobile carriers to accept their technology and allow VoIP calls to be made across the GSM and 3G airwaves and not just when smart phone users are in Wi-Fi zones. The Voice on the Net (Von) coalition through which Skype is calling for new regulations includes IT giants Intel and Microsoft and Google.

The only mobile openly on Skype’s side so far is 3 which is alone in already allowing Skype calls across its 3G network. In fact, it claims a million minutes of Skype to Skype calls are made every month on its network for free (subscribers can also make cut price Skype calls from a 3 mobile to landlines and mobile phones abroad).

The 3G mobile network announced as the iPhone Wi-Fi application was released that the rest of the mobile operators were playing ‘catch up’ with its Skype-friendly approach but, it would seem fair to say, 3’s use of Skype underlines its status as a challenger brand which the global giants of mobile telecommunications are happy to let it assume if it means giving away airspace for free, or considerably discounted.