When Services Go Pro, Reach for Your Gun

Alarming and confusing news and views concerning Skype’s announcement of its new pricing strategy. Here’s a summary.

Key elements trumpeted in Skype’s press release (the most detailed information is here, courtesy of SkypeJournal):

  • Premium subscription package called Skype Pro, which includes free Skype Voicemail (€15 previously) and €30 off a SkypeIn number (previously €30). Cost: €2 per month
  • Removes per minute charges for SkypeOut calls (i.e. calls to ordinary phones) so long as they’re landlines and to the same country you’re in at the time of calling. I.e: unlimited calling, so long as it’s not to mobile phones.
  • Every SkypeOut (and I think SkypeIn) call, whether it’s to voicemail or not, incurs a separate connection fee of 0.039 Euro, excl VAT (5 U.S. cents). (This does not apply to existing unlimited calling plans if you’re calling within your specific country.)
  • Some SkypeOut destinations have been reduced (about seven, including Malaysia) for Skype Pro users to the Global Rate of 1.7 cents per minute).

Skype claims this option “offers our users more for less because they can buy additional Skype paid for products but for a smaller cost”. The service will be phased in from now in Europe, and, for now, will be available alongside the traditional service. (For Asian readers, Hong kong, Japan, Taiwan, South Korea and Australia are next.)

What does this mean for you? Well, of course it depends on what kind of user you are, and where you’re calling.

  • You’re going to be paying more per call than you were before, because of the connection fee.
  • If you’re an international caller, it’s going to be harder to calculate your potential savings/losses. I must confess I’m still trying to figure this out.
  • Jean Mercier, based in Belgium, has done some sums on his calling habits, and concludes that “occasional SkypeOut users will pay for the heavy SkypeOut users”. In other words, if you don’t use it a lot, you’ll end up paying more than you would before. HIs conclusion: “I really am astounded, and not in a positive way!”
  • Olga Kharif at BusinessWeek says it’s part of general raising of VOIP rates. “Sure, they need to find a way to make money. But I think raising prices is a big mistake. In the past, users switched to VoIP because it was the cheapest calling option around. When it’s no longer that, customers might no longer hurry to abandon their traditional telecom services providers for upstarts.”
  • Phil Wolff of SkypeJournal says you’ll be better off if you SkypeOut an average 4.3 minutes per day, or a couple of hours per month. This does not seem to include the connection fee in the calculation, however, and may not be relevant for international calls. I’m checking this with Phil.
  • For Paul Kapustka of GigaOM, the reasons behind the move are simple: Skype is in trouble. “Just add some cash to the bottom line, quickly! For customers, the question is — do you want eBay to be your phone company?”
  • PhoneBoy says that “what they are really doing is raising the price”.

My conclusions: Skype has been a revolution for a lot of my readers and friends who aren’t usually all that enamoured of technology. They’ve bought a headset, got a cable connection, installed the software, bought some credits, all because of the savings Skype offers. Many of them also enjoy the benefits of being online in a buddy list.

But what if Skype is no longer the cheapest option? Or if they feel they’re being lied to by press releases that are less than forthcoming about the real deal? Will they turn their newfound confidence in technology to switch to something cheaper and take all their buddies with them?

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21. January 2007 by jeremy
Categories: Phones | Tags: , , , , , , , , , , | 3 comments

Comments (3)

  1. Exactly. This sort of grab for easy money is going to drive users straight back to their landline telcos in droves.

  2. “Exactly. This sort of grab for easy money is going to drive users straight back to their landline telcos in droves.”

    You don’t think Skype have already thought about this? If Skype thinks it can get away with a new (more expensive) pricing scheme, good on them – AFAIK they are not a monopoly.

  3. Skype was never the cheapest option. If you are willing to shop around, you could always find someone cheaper than Skype. Skype was “good enough” for many people, though a raise in price will likely make some people “think twice.”