Skype Out Now Free in USA and Canada

Skype today eliminated any cost to dial USA and Canadian landlines and mobile phones. This is sampling at its finest and will be available for the rest of the year. While a wonderful gift to Skype users if you loaded up (i.e. paid for) on minutes and only make North American calls you may not be too happy, unless you want to buy ringtones and avatars that is.

One also has to wonder if this is going to help or hurt earnout for the original investors who still have two billion reasons to care. If the minutes are free for the next six and a half months, those originally forecasted revenues, and all the new ones that would have been generated are now in abeyance.

In the pre-paid world the unused minutes are called breakage. Now the minutes get saved, Skype earns interest on your money, drives up what they hope will be addictive use of Skype Out for the longer term payout.

One issue is the steady stream of complaints (and my own experience) related to Skype Out call quality. Recently in a meeting with an ex CEO of a well regarded VoIP company, he pointed out the problem with Skype Out that I’ve related to Skype officials in the past, that of varying quality between cell carriers and locations.

By making the calls free they eliminate the complaint volume, because you can’t complain about what you don’t pay for. But there is another reason that likely makes more sense. As more traffic goes to Skype In numbers, Skype earns credit with the mobile carriers and the iLecs. That means they have reserves which are non-cash assets. By driving more usage the other way, those balances start to come down, but Skype builds up more users and greater user experience. It's a move that done now, helps build for the future. The last reason is that Skype usage in the USA is likely lower than they would like, and the Skype Out usage is more international than domestic, so that also needs some balance brought in. It's both accounting and economics being played out.

My question is will Yahoo and Gizmo follow suit?