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Internet `Skype' service shakes telecom market

The popularity of the Skype service is pushing telecom operators to jump on the Internet telephone bandwagon as the new low-priced calling service is gradually muscling in on phone company's turf of wired household calls, a Taipei-based research house said yesterday.

The new online calling service has threatened traditional phone companies who are dealing with falling revenues in fixed-line telephones because of mobile phone and instance message services, said Andy Yeh (葉振男), an analyst with Topology Research Institute (拓璞產業研究所) at a seminar.

Citing Chunghwa Telecom Co (中華電信), Taiwan's biggest phone company, as an example, revenue in long-distance calls and overseas calls dropped 12 percent and 2 percent in the third quarter last year from the previous year, Yeh said.

"To fend off increasing competition from Internet phone service providers, telecom operators have no choice but to jump on the service, though such a move could do little to snare users from Skype," Yeh said.

Skype users have skyrocketed to 30 million people around the world in the first months since it was launched, as people take advantage of making calls online using free software at a 20 percent lower rate, Yeh said, citing the company's statistics from the Web site.

In Taiwan, only nine months after local Internet service provider PChome (網路家庭) introduced the Skype service, there are as many as 1.5 million Skype users who regularly use their computers to make online calls to mobile phones or land-line numbers.

That number is expected to double to 3 million by the end of this year, said PChome vice president Robert Lo (羅子亮).

To safeguard their turf, Taiwan's private fixed-line service providers Sparq (速博) and Eastern Broadband Telecom (東森寬頻) are seeking partners to provide online call services, Yeh said.

As the government currently restricts Internet phone services by limiting the release of phone numbers, the state-run Chunghwa Telecom is resistant to expanding the Internet service to household users as the service could hurt its traditional fixed-line calling and mobile business.

The phone company now only offers Internet telephone services to its corporate users.

"We are carefully watching the market development now," said a company spokesman Hank Wang (王漢朝) earlier this month, adding that most Internet phone service providers were still losing money.

PChome's Lo admitted that it was not easy to make quick profits from the cheap service.

But incoming payment services, including voice mail, will boost sales for his company by the end of this year, Lo said.
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