The large serious players are unlikely to do anything that is illegal. So we might not see them entering in to a market that prohibits VoIP. This makes a market for the small, often a group of friends or colleagues joining to form a VoIP company. SIP is an open source platform and getting a softphone is not difficult for these people. Then you have so many wholesalers from where one can add minutes.

There are thousands of such small VoIP providers who mainly exist only because of prohibited markets. They easily sneak in to these markets and through resellers sell their cards and softphones to the customers. Regulators also, rarely come to know about these unheard of VoIP ‘companies’ and do not block them.

Having a fair number of players in the market is good for any market as it creates tough competition benefiting customers. But in case of VoIP, the market is highly fragmented and because of these small players the large ones (serious ones) are suffering. This is creating problems for the mainstream players as well as the industry. The main problem to which these small operators are contributing is about the perception of the technology. Since, they are small, they look for cheap things. Cheap equipments, cheap minutes and at the same time give no attention to QoS. So the users are never able to see the acceptable level of quality coming through VoIP and that hinders them trying the service again even from a serious player.

Even if the incumbents have problems in allowing VoIP in their respective countries, they could resort to restrictive market practices rather than not allowing the service altogether (through the respective regulators). The best policy in the interests of the incumbent was that the Incumbent should only be allowed to offer VoIP. That way it would not lose on the revenues that otherwise go to these small VoIP operators and when people have the alternative, they would not look at the illegal things. Hope these regulators finally wake up and allow VoIP even in limited manner.

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The application is used by over 400 million registered users. The most recent update (Version 4) has made some interesting makeover apparently projecting video calling. Although, there are no authentic figures about how many of these do actually use paid services of Skype, but it is evident that a nominal percentage actually pays for any of Skype’s services.

Not sure, how long the company will sustain this model and if it makes all the services paid; will that be acceptable as there are many other clients offering free PC to PC service. To boost up the revenues, Skype must try out with the ad based model. Skype has two potential streams for revenue through advertisements. One could be the banner and display advertisements that could be used in the windows of the client. Another slot that Skype could try with advertisements is the time from initiating a call till the connection is established (the ringing period). I have observed it takes a minimum of 30 seconds to establish a call and this time can be used for voice ads by Skype. Though the advertising must be for free services only i.e. PC to PC calling.

With the speculations going around that Skype founders are repurchasing it, hope they boost the revenues with the introduction of advertising. Till then enjoy free Skyping.

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