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What Is Skype

by James E. Gaskin
Skype lets you make free calls over the internet to anyone else who also has the service. It's free and easy to download and use, and it works with most computers. Skype offers free global telephony and unlimited voice calls with its next-generation peer-to-peer software.

This article discusses the following:

  1. The Viral Phone Service
  2. How Skype Works
  3. Skype Extras and Presence
  4. Skype Limitations

It's a bird, it's a plane--it's an advanced communications peer-to-peer network disguised as a phone service? Skype calls itself "free Internet telephony that just works," but it's much more than that, even if the company plays coy about all that Skype can do.

Slipping onto the scene back in August 2003, Skype came from the two principals behind the KaZaA file-sharing network. Founders Zennstrom and Friis call Skype a third-generation peer- to-peer network, quietly putting KaZaA in their past. (They sold the service before most of the bad press started.) Their background in peer-to-peer networking makes Skype a different type of telephone service in a number of ways.

Skype works on a decentralized model, meaning there are no big phone switches and controlling computers in regional data centers, such as those that power Vonage and other broadband phone service providers. The only centralized Skype services at the beginning were the login servers, which also show which other Skype users are online. The switches that followed control SkypeOut calls to traditional telephone networks around the world. Adding Skype Voicemail and SkypeIn (still in beta in early August) requires more centralized resources, and Skype data centers are growing as you read this. But Skype's low infrastructure cost per number of subscribers creates jealousy among every other broadband phone service provider.

The Viral Phone Service

Related Reading

Talk Is Cheap
Switching to Internet Telephones
By James E. Gaskin

Primarily, Skype offers free software that lets you talk by way of the internet to another Skype user, anywhere in the world, for free. Your computer (or PocketPC) works as your phone.

Free Skype client software for Windows, Macintosh, Linux (Red Hat/Fedora Core, SuSE, Mandrake/Mandriva, and multiple Debian flavors such as Xandros, MEPIS, and Ubuntu), and PocketPC may be downloaded free from the Skype.com site. People download Skype client software by the millions every month. At the beginning of 2005, the download counter was around 75 million (the download number includes active customers downloading updates). At the beginning of August 2005, the counter showed more than 144 million downloads.

Skype's marketing expenses for advertising and other, normal company rollout hoopla: zero. More than 25 million registered users, 3 million-plus of whom are often online concurrently, were persuaded to join Skype by word of mouth.

Other internet telephony services, such as Vonage, Verizon, Packet8, ATT CallVantage, and others, spend hundreds of dollars of marketing and advertising money to find each new customer. Skype spends nothing except for the server support to keep its download files available.

Forget the technology, and appreciate that Skype became so cool and desirable that 25 times more people have registered for Skype than all other broadband phone services combined. Skype fans, every bit as rabid as early Macintosh fans, spread the word 25 million times that Skype was a hip and free method of talking to friends anywhere in the world.

How Skype Works

Skype setup and configuration rates among the easiest of any application you're likely to use. This is by design. Founders said they planned for Skype to be the most user-friendly application available today, and they may have hit their target.

Here's the process:

  1. Download the software. (Maybe you'll get a prize for being the 150 millionth download customer.)
  2. Install the software. It automatically configures itself for your computer and network.
  3. Register as a Skype user. (Finding a unique name will be the tough part.)
  4. Get a headset for your computer. Using external speakers and a microphone is possible but not practical.
  5. Locate another Skype user. Searching tools make this easy.
  6. Click on a Skype contact name. You can do this from a variety of places within the client application.
  7. Talk free to people anywhere in the world, or even above the world, such as Mt. Everest and jetliners with broadband links for passengers.

Be prepared for two surprises. First, although tied to a computer, Skype uses standard telephone sounds. Second, the audio quality will amaze you.

My first call was to a Skype public relations contact in London. (I'm in the Dallas area.) I used Skype on an old Pentium III 700MHz laptop over a 802.11g wireless link to a DSL line. My headset was a $20 unit. I intentionally picked low-end equipment and connections to model how some users will implement their own systems.

The call quality stunned me so much I looked around to see if my conversation partner had somehow teleported from England to Texas and was sitting beside me. I had never before heard a call so clear and full as I did on that first transcontinental call using cheap equipment and Skype.

By leveraging transmission efficiencies in digital voice and reliable broadband networks, Skype transmits the full frequency range of human hearing (20Hz to 20KHz). Compare this with the standard phone frequency of 300Hz to 3.4KHz and you can see why Skype calls sound so wonderful. The extra frequencies transmitted add richness and depth at the bottom, and all the complex overtones and harmonics at the top, to make voices sound real rather than canned. Using Skype the first time, one of your first reactions will be anger at the world of Ma Bell and how she stuck us with lousy voice quality for more than 100 years rather than leveraging technology to improve phone transmissions.

Those hurrahs aside, there are some caveats. Your computer must be turned on to use Skype, and people you call must have Skype running on their system in order to receive your call. Skype spreads by one person encouraging another to download Skype and call them, and that call usually comes within five minutes. Technically, a dial-up connection will suffice, but realistically you need broadband to really enjoy Skype.

Skype Extras and Presence

So far, we've looked at how Skype can replace a standard phone or cell phone. No big deal, aside from the drastically improved call quality. But dig a little deeper into what else Skype offers now and plans to roll out soon, and you realize Skype is the most advanced voice communications tool available today.

What you don't realize, because Skype doesn't make a big deal out of it, is that every Skype connection uses 256-bit encryption. The call quality astounds people, so no one guesses the encryption is automatic and engaged on every connection. You must move to restricted military telecom hardware to get a higher level of encryption than what Skype provides, free, on every call. Look for some serious hand-wringing among law enforcement and the Department of Homeland Security when they finally realize how prevalent Skype is worldwide.

Skype's standard features are:

That's a short list. Instant messaging with Chat works as expected, but only within the Skype application. No connections to outside IM services are yet available. File transfer, also within the Skype application, is slow but encrypted. Technical support personnel will use Skype to IM usernames and passwords because, unlike other IM systems, Skype IM is secure.

One of the best business uses of Skype is for conference calls. Costs to arrange a five-way conference through normal telecom providers start high and add up quickly, but Skype connects users for free. At least two conference phone vendors now include USB connections, and adapters for existing conference phones (USB to RJ-11) are available. Add in the higher quality of Skype calls, and the free conferencing functions via Skype make excellent economic sense for companies large and small.

Notice something critical that's missing? The ability to call regular phones and have regular phones call you on Skype. More on that shortly.

Skype's optional features are:

SkypeOut, Skype's first product that generated revenue, lets Skype users call normal phones. Currently, the price is under 2 cents per minute, but you must buy a minimum of 10 euros (about $13.50) of calling minutes.

Quality of Skype-to-PSTN (Public Switched Telephone Network) calls too often drop below acceptable standards. The same goes for SkypeIn, the service assigning PSTN phone numbers to Skype users for incoming calls. Voice mail, the lack of which created many Skype user complaints, works quite well.

"Presence," the ability to locate and reach others over the network, adds to Skype's value. As with expensive enterprise network offerings, Skype clients show availability based on keyboard activity. When a user logs in to Skype from multiple clients, calls and messages appear at all locations, making it easy to pick up connections no matter where the person may be. Adding to this capability is Skype Zones (beta), which uses wireless hot spots for Skype connections.

Skype recently offered developers ways to connect to the Skype application, and many companies are hitching their products to the global Skype bandwagon. One of the most successful is VSkype and its video offering running over Skype connections.

Skype Limitations

Two major weak points will keep Skype from taking over the telecommunications world, in spite of what Skype fanatics proclaim. First, relatively few people will give up a "normal" phone for a PC-linked Skype connection. New products, such as standard phone handsets with USB connectors, help blur the line separating Skype from the rest of the telephone world, but that line remains. I believe Skype will remain a niche product, although that niche will widen each day with 150,000 more downloads from Skype.com.

Second, and potentially more damaging to a Skype worldview, is Skype's completely proprietary nature. Open source fans don't appreciate Skype's rejection of open source values and standards. Large companies don't appreciate Skype's way of worming through corporate firewalls.

Two major computer-based phone products that do follow standards, SIPphone and FreeWorldDialup, have tiny market share compared to Skype but have the weight of internet standards on their side. Their limited market share will not threaten to overwhelm Skype but may grow large enough to push Skype to involvement with the standards community. That probably won't happen until at least 2008, and will likely depend on how Microsoft implements Voice over IP support in Windows Vista, which will hit the streets in 2007.

Skype may not take over the world. However, Skype makes the world's highest-quality phone connections available for the world's lowest price: free.

James E. Gaskin has been solving computer and network problems for businesses small and large since 1984. He writes books, articles, and jokes about technology and real life. In 16 books and hundreds of articles, network consultant Gaskin tells people faster, cheaper, newer, and smarter ways to connect to each other and the world. He also maintains the site for his newest book, Talk Is Cheap.

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