Skype's an easy call to make

Its name rhymes with 'hype' but many New Zealand businesses are delighted to find internet telephony software Skype is anything but.

Skype is an internet based service that lets people send and receive voice or video calls over the internet using Microsoft, Apple or Linux computers; laptops, cordless phones (which connect to the USB port of computers), and smart phones and PDAs running certain Microsoft operating systems. Eventually, more mobile phones will send and receive internet Skype calls thanks to recent deals between Skype and international cellular and WiFi network providers and phone makers.

What all this means is when a business buys a Skype subscription and software (which can include web and teleconferencing, internal telephony management and remote access applications); and hardware like cordless phones, speaker phones and computer headsets; it can place national and international calls to other Skype subscribers for free. Skype calls using the internet can also be made to traditional PSTN telephony networks and mobile phone networks such as Telecom's and Vodafone's for a per-minute charge of a few cents (the actual rate varies depending on the country called and the type of telephony network).

The potential cost savings of using Skype instead of proprietary telephone networks are significant as are the reason Skype is now one of the fastest growing internet applications in the world. According to internet research, Skype has 75 million customers and four per cent of all international phone traffic. Skype CEO Niklas Zennstrom says Skype particularly appeals to businesses with less than 10 employees, and these make up more than half of all Skype business customers.

"We know from listening to our more than 75 million customers that 30 percent regularly using Skype for their businesses and most of these are small companies," said Zennstrom in a March press release.

This makes sense when you consider larger organisations have more complex telephony needs and larger office networks which may need special configuration to run Skype successfully. And this raises an important question: while Skype is undoubtedly a telephony breakthrough for home users, what are the full implications of using Skype in the office? Is it all reduced costs and the triumph of escaping telco toll charges - or are there issues that businesses need to be aware of? It's a bit of both.

While Skype supports a vision that bodes well for business - external telephony as a software application that can be easily managed and is not charged for - it needs to prove itself in different ways and over a longer term. First, Skype needs a broadband internet connection because dial up connections don't deliver the quality of service needed. While broadband connections are reasonably common among New Zealand businesses, many small and home based businesses still rely on dial-up modem connections. Second, anecdotal and web forum feedback from Skype business users suggests Skype can sometimes 'drop' a call or there can be a slight delay between when one person speaks and the other person hears. This delay, known as 'latency' is highly disruptive to normal conversation as anyone who has tried talking on a poor long-distance phone call can testify.

While Skype teleconferencing often works as well, if not better, than traditional telephone network conference calls, if latency is a problem the more people on the call the worse the disruption will be. Further, while business network firewalls and proxy servers don't prevent Skype from working in a business network environment, Skype calls can't interact with all types of business software and telephony applications. For example, a Skype call can be placed to a business landline but may not be able to be transferred within the internal telephony system of that business.

Accountability is another question mark hanging over Skype; if call quality or network reliability becomes a problem, a business using a proprietary telecommunications service can always confront its network provider; with Skype, business users can visit Skype trouble-shooting web sites there's no network provider to address because the network is the public Internet.

Finally, and without getting too technical, businesses that use Skype use a peer-to-peer service, which means the internet bandwidth of the business can be 'borrowed' by other Skype users. This may result in increased data traffic charges. For these reasons and others, some businesses decide to use Skype casually from home or on non-networked computers rather than within an office network.