Skype users received an early holiday present, at least those in the USA and Canada, with a new year long pricing scheme that provides twelve months of unlimited calls from the USA and Canada to numbers in the USA and Canada for $29.95 a year if you sign up after January 31 2007 or up until December 31st, 2007 if you sign up now at the promotional rate of $14.95. For those with existing Skype Out credit, the value can be converted.
While the free calling doesn't apply to calls made from outside the US and Canada (unless you use a VPN that works with a server in one of those countries like HotSpotVPN.com which has worked with VOIP clients in the past, subscribers to the program will get all the calls they want that reach non Skype users in those two countries.
With the offer Skype in my view comes even closer to passing the "duck test" of being a phone company. Even though they sell Skype In as one product and show the cost savings vs. the traditional carriers and VoIP suppliers and contend they are not a primary line replacement, with each move they make, they quack more and more like one in my view, and the view of some former Bell/AT&T types I know.
All of that aside, I like the offer and fully expect to see the promotion help drive more USA adoption of Skype. This bodes well for eBay, whose leadership has been questioned, but at the same time may have some impact on the purchase earnout, as once again, Skype has lowered what it can generate per subscriber in exchange for a more predictable revenue stream. First off, subscribers pay up front, which means eBay gets use of their money. It's credit in reverse and is very much like PayPal where money goes into your account from your bank sooner than it shows up available to use (only Paypal to Paypal is instant cash) which means eBay has more float to work. To stay true to GAAP (Generally Accepted Accounting Principles) Skype will spread the annual fee over 12 months to account for it to offset costs for uses. Thus it becomes a liability, much like a gift certificate, if they account for it the way it was explained to me. That means they hope people pay and never use more than 125 minutes a month. The costs go sideways if everyone starts using Skype for thousands of minutes a month to call regular phone numbers and I wonder what abuse prevention Skype has installed, as this is a telemarketer's dream come true.
Where is the impact on the industry? For many who now have broadband in the USA, Skype hopes to pick up more P2P callers as well as see some revenue growth more quickly. The erosion of minutes that will shift to Skype to other phones will likely impact mobile to landline and mobile to mobile, but could also trigger more erosion of landlines in North America. Face it, with all the new Skype devices, corded and cordless, wired and wireless, the Skype phone with a Skype In number and the new pricing plan means for under $60.00 a year a person can have a phone number that works like a regular phone, totally disrupting the market. For a family of three or more, that means everyone can have their own number, calling plan for dirt cheap.
One has to thus compare this to the yet to be announced Earthlink package of a WiFi phone and their True Voice plan, which if all goes as I'm hearing will offer a phone number, with E911, for under $15-20 a month. The Skype package thus guts that before it's out the door, and while Earthlink plays it safe with E911, Skype plays rebel and goes its own way for far less money. So while I applaud Skype's new leadership for making the deal so sweet, I wonder just how long the FCC will keep their paws off this one. My guess is when a Vonage E911 failure like the ones in Florida and Texas happens to Skype, they will jump in, or some state public utility commission or a local public safety commission will. So a note to all of those who use babysitters...explain how the call emergency services in your home. If I was Skype I would help promote all the alternative emergency dial up numbers, community by community in the USA and Canada, before the problem arises as a Public Service. Will it prevent the Vonage like fiascos. Not entirely. But if it saves one life, then it's worth it.
But given the price, to take license from the words of Mario Puzzo who penned the "Godfather" it's an offer you can't refuse."
P.S. Today's pricing announcement likely will overshadow the fact that Skype 3.0 went "Gold" today. The new version of Skype introduces exciting new features including Extras and Public Chats. Extras now allows you to play games with friends and family all over the world, Public Chats connects you to people in Skype’s global community that share similar interests. In my view Skype keeps becoming more and more a browser.