International phone companies are being gutted by the Voice over IP outfit Skype. Analyst Stephan Beckert, analyst at research firm TeleGeography said that Skype is now the largest provider of cross border communications in the world.
Skype's technology allows consumers to make practically free long-distance calls over the internet on fixed lines. It is mostly used on desktops but Skype has made the move into mobile too and it now comes pre-installed on some mobile phones.
International calls had been growing by 16 per cent a year until Skype showed up. Now this has dropped to just eight per cent. By comparison, Skype's on-net international traffic between two Skype users grew 51 per cent in 2008, and is projected to grow 63 per cent in 2009, to 54 billion minutes.
Despite all that Skype does not make a lot of dosh. It made about $US 551 million. Apparently the outfit has had a difficult time getting users to pay for its largely free services.