Internet-based telephony

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Online auction site Ebay announced that it’s selling internet voice-and-video conferencing tool Skype for almost $2 billion. Were the two companies simply strange bedfellows? Or did eBay dump Skype because Skype’s voice over internet protocol (VoIP) is no longer the frontrunner in voice technology?

“Basically Ebay’s idea was that people were going to talk to each other before they bid on things,” said Cliff Kuang at “Wired” magazine. “At the time they were in a bidding war for Skype with Google, and the things they wanted to happen with Skype didn’t turn out. But that doesn’t mean that Skype is not a good business or that it doesn’t have a pretty bright future.”

“Skype is pretty successful — it accounts for eight percent of all international voice traffic … even though it hasn’t innovated very much,” said Baratunde Thurston, host of the new TV show “Popular Science’s Future Of” and a former telecommunications analyst.

Thurston adds that internet telephony is the future, “I think the idea of traditional telephony is one that we’ll laugh at 10-15 years down the line when we had this notion of this dedicated device just for talking, with a dedicated number just for a voice application. These things will arrive more naturally over the internet in the way that a game does, or a movie does, or a song file does … we have artificial barriers in place because the business model is predicated on older technology, but it’s slowly fading out.”

The obstacles to telephony becoming ubiquitous and not device-bound, according to Kuang are the phone companies themselves and the difficulty of monetizing internet-based phone service:

“Right now the telephone service that you have on your cell phone is 3G, and that’s really a Frankenstein monster that involves voice and data technology. What’s preventing that from advancing that into something that’s purely data technology is that the cell phone companies have no incentive to get rid of this expensive infrastructure that they’ve spent hundreds of billions of dollars on, so they’re really trying to slow-roll this before introducing the next thing, which is going to be 4G.

“One of the interesting things about Skype is who didn’t buy it this time around — it’s Google once again, and Google was apparently nervous about the ramifications that it might pose for their cell phone business.”

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