Overseas calls on Skype grow 41%

Global use of the internet-based telephone service for international calls grew by 41% per cent last year, making it the world's largest provider of cross-border phone calls.

Global use of the internet-based telephone service Skype for international calls grew by 41 per cent last year, making the company the world's largest provider of cross-border phone calls. Skype, whose website is blocked by the UAE telecommunications regulator, accounts for almost one in every 10 minutes of international calling, according to figures released yesterday by the research firm Telegeography.

"We've been tracking Skype since they started and their volumes have been growing rapidly over the years," said Stephan Beckert, the director of research at Telegeography. "Last year, the growth was really strong, particularly in the last quarter." Several recent research reports have suggested that telecoms providers would experience growing demand despite poor economic conditions, as people replaced more expensive forms of entertainment with web browsing, text messaging and phone calls.

But Mr Beckert was reluctant to link the growing use of the low-cost Skype service with a slowing world economy. "One quarter doesn't make a trend, but time will tell." Telegeography counts most major international telecoms companies, including Skype, among its customers. In a report released yesterday, it said total international calling grew by 12 per cent last year from 2007, reaching a total of 384 billion minutes. Skype was responsible for 8 per cent, or 33 billion minutes, of the total.

Internet telephone services such as Skype require a UAE telecoms licence to be able to offer their services legally in the country, according to the Telecommunications Regulatory Authority (TRA). Only Etisalat and du have such a licence, but the TRA has said in the past that it was working on regulatory changes that would eventually make more licences available. In developed markets where Skype had proved popular, Mr Beckert said there was an increasing trend among traditional telecoms operators towards offering smarter voice-calling services that were integrated with the internet.

"It has opened a lot of people's eyes to what can be done with voice services," he said. "The idea that you can have higher-quality voice calls over broadband than a landline, that you can add video or instant messaging to the mix, this has really led to some interesting new services." Due to deregulation and globalisation, the volume of international calls has increased more than tenfold since Telegeography began its reporting in 1988. In the same period, the average cost of international calling went down by more than 80 per cent, the report said. But traffic has grown fast enough to offset the shrinking prices, meaning total industry revenues continue to rise.

The rapid uptake of mobile phones has also changed the way network operators look at voice calling, both domestically and internationally. The Telegeography report said mobile phones would overtake landlines this year as the most common means of receiving international calls. In the UAE, both Etisalat and du have cut call costs and introduced special international calling plans in the past year. "International voice [calling] is developing into something of a 'loss leader'," the report said. "A growing number of service providers are offering flat-rate or heavily discounted international calling services in order to draw subscribers to their bundled fixed-line or mobile-phone service."