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Skype figures don't add up

Users turning away in droves

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Skype, once by far the dominant IP telephony service, has had its market share cut in half over the past year, according to a new study from network monitoring firm Sandvine.

At the end of 2005 Skype represented 45 percent of all European VoIP traffic, while services offered by broadband ISPs such as NTL/Telewest, Italy's FastWeb and France's Free Telecom controlled 51.2 percent of traffic, according to Sandvine. That compares with Skype's 90 percent of VoIP traffic a year ago, the company said.

Skype has even lower market share in North America, where it now has 14.4 percent of traffic, trailing behind Vonage's 21.7 percent. Service provider-branded VoIP has 53 percent of all VoIP minutes in North America.

"Consumers are clearly embracing the VoIP products offered by broadband service providers in Europe and North America," said Tom Donnelly, marketing vice president for for Sandvine.

The study examines the traffic trends of more than 700,000 broadband households from a group of service providers with more than 6 million subscribers. It highlights the rapid progress made by VoIP services offered as a triple-play by broadband providers, who bundle it with television and Internet services.

A separate report issued this week by InStat found that 73 percent of VoIP customers aren't even aware that they're using an Internet-based telephony service, since the service is marketed as an ordinary telephone service along with a bundle of other products.

The InStat report found that 16 million consumers worldwide were using VoIP by the end of 2005, a figure projected to grow to 55 million in the next three years.

In September, auction giant eBay purchased Skype for $2.6 billion, but the recent figures cast doubt on the service's long-term competitiveness.

Skype's user base isn't necessarily eroding, but new broadband subscribers are increasingly opting to use the VoIP service offered by their provider, according to Sandvine. North American broadband providers that have rolled out network-wide VoIP are now capturing 81.8 percent of the VoIP minutes on their own networks, the company found, with third-party services such as Skype taking just 12.9 percent on those networks.

In July, Point Topic said that the number of active Skype users was far lower than the number of downloaded clients or registered users. At the time, the Skype client had been downloaded 100 million times, and there were 35 million registered users, but Point Topic estimated Skype had only 5.3 million active users. Skype says its client has now been downloaded more than 245 million times.


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