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Due To Skype, Your International Calls Will Not Be Completed As Dialed

Skype to phone companies: I. DRINK. YOUR. MILKSHAKE.

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Due To Skype, Your International Calls Will Not Be Completed As Dialed
[ Technology]

In the very near future it looks like we’ll be adding the international phone call to the List of Inglorious Obsolescence currently populated by Crystal Pepsi, privacy, MC Hammer pants, and crank-start automobiles. Due to the increased “cross-border traffic” of Skype users, fewer and fewer people are making international long-distance telephone calls with their phone company.

A new study released today from TeleGeography, a telecom market research firm, shows the inverse correlations of decreasing traffic of international phone calls with the booming growth of Skype-to-Skype international calls. From their summary:

International long-distance traffic growth is slowing rapidly. According to new data from TeleGeography, international long-distance traffic grew four percent in 2011, to 438 billion minutes. This growth rate was less than one-third of the industry’s long-run historical average of 13 percent annual growth.

In contrast to international phone traffic, Skype’s cross-border traffic has continued to soar. TeleGeography estimates that cross-border Skype-to-Skype calls (including video calls) grew 48 percent in 2011, to 145 billion minutes. Although the volume of international traffic routed via telephone companies remains more than three times greater than Skype’s cross-border volumes, their growth rates differ dramatically. TeleGeography estimates that Skype added 47 billion minutes of international traffic in 2011 — more than twice as much as all the telephone companies in the world, combined.

The correlation, however, likely suggests causality instead of merely pointing out two concurrent trends. Stephan Beckert, an analyst with TeleGeography, said that “given Skype’s enormous traffic volumes, it’s difficult not to conclude that at least some of Skype’s growth is coming at the expense of traditional carriers.” In what they’ve labeled the Skype Effect, the loss of international call traffic from phone companies has directly translated into fat stacks of caller traffic for Skype.

“If all of Skype’s on-net traffic had been routed via phone companies,” Beckert continues, “global cross-border telephone traffic would have grown 13 percent in 2011, remaining in line with historical growth rates.”

To wit:

Aside from the obvious straight-up yoinking of international calls happening in this graph here, is anybody else really curious as to why 2000 was such an awesome year to call people in other countries? Again, it’s certainly not because people wanna make less international phone calls in the past few years – just look at the steep slopes of growth on this next bar graph.

This probably shouldn’t qualify as news given it wedges nicely into the category labeled “inevitable,” but the real story here is the one about another communications industry – this time the phone companies – caught with their pants down while The Future briskly passed them by. If a company’s vision is so limited as to fail to anticipate the obvious and imminent arrival of more advanced technology that will ultimately render their services obsolete, then that’s too bad – they’ve earned that permanent vacation to Loserville. The people are gonna use whatever makes their life convenient and, today, that convenience is called Skype.

Due To Skype, Your International Calls Will Not Be Completed As Dialed
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  • http://www.telegeography.com Stephan

    Thanks for covering our report.

    I don’t think the situation is quite as stark as you suggest. The figure you cite doesn’t show a decline in the volume of international traffic—it shows a decline in the *rate of growth* of international traffic. That’s still bad news for international service providers, since they rely on volume growth to offset steady price declines. As a result, aggregate industry revenue growth is pretty much flat now, but it’s certainly not in free fall. While I wouldn’t recommend starting a career in the international long distance business these days, it’s not going away anytime soon.

    Why was traffic growth in the late 90s and early 2000s so high? The market circumstances were completely different then. A large number of countries, including most of European Union, liberalized their telecom markets in 1998. That led to dramatic declines in calling prices—e.g. fixed-to-fixed calls from Germany to the US fell from about $1.00 per minute to 5 cents per minute in the span of 3 or 4 years. That’s what caused the spike in traffic growth in the late 90s and early 2000s—pent up demand meeting rapidly falling prices.

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