International Long Distance Growth Slumps, While Skype Soars

Telegeography has an interesting report, with the accompanying bar chart (click to see a larger version of the graphic), showing recent trends in the annual growth of international long distance (ILD) service versus Skype.  Keep in mind that these are growth rates, and not actual growth, or volume of traffic.  International long distance services continue to grow, but at a much slower rate.  As the graphic clearly shows, the crossover point at which Skype's growth exceeded ILD was in 2009.  That was also the year that "smart phone shock" hit South Korea and mobile broadband continued its rapid diffusion worldwide.  Skype and similar services are even more convenient when loaded on a mobile device.  These developments clearly portend a future in which the majority of people will prefer VOIP services like Skype for most of their voice communication.  One of my friends who works in the communications field just wrote me that he's been happily using Skype for seven years now.  Of course, you can't beat the cost of Skype-to-Skype calls!

More on the Skype Outage and its Implications

Like millions of others around the world, I experienced the disappearance (see the previous post) of my normally dependable Skype service.  It was out of order all day yesterday (December 23), but by this morning I was able to log on normally.

The media are full of stories about the Skype outage.  As The New York Times "Bits" column noted, Skype will struggle to restore not only its service, but its reputation.  Skype has announced that its problem was with "supernodes," computers among its network of 124 million users that serve as phone directories and help connect calls.  For unknown reasons, they were taken off line.  Although unknown, Skype did know and announce, according to the BBC, that the fault had been caused by a "software issue" on critical parts of its network.

Skype has announced plans to compensate users for the outage, but the long term impact of this event will be on the dependability of Skype service, especially for business users.  I'd be interested in comments from other Skype users here in Korea about how this event affected them.

Mergers and Convergence in Korea: KT-KTF, Android, VOIP

The merger of KT with KTF has been approved by the Korea Communications Commission. This merger is considered to be the largest ever in South Korea, outside the financial industry. From a global perspective, it is one of several steps being taken here that will push rapid convergence toward a single, fast digital network for the future. The move has several very interesting implications as follows:

• As noted in a Joongang Daily article, it will mark a shift to packaged services in South Korea's telecommunications industry. After the two firms, which split in 1996, are joined together they will sell landlines, mobile service, high speed internet and internet television as part of a bundled package.


• This merger is expected to encourage other mergers in the sector. Under this scenario, SK Telecom will merge with SK Broadband and LG Telecom will merge with LG Powercom.


• KT is reported to be working with Samsung on a handset that will be capable of operating on both 3G and WiBro networks. This has powerful implications since it means that VOIP services like Skype or the forthcoming Google Voice will be available via this phone.

The last bullet point above is very significant and seems to indicate that the Korea Communications Commission and overall Korean government policy is going to push rapidly and forcefully for full convergence into a single, interconnected digital network that merges voice, data and television, along with fixed and mobile networks.

Ohmynews, in the article cited above, suggested that the merger of KT and KTF might "open up VOIP Heaven." We'll all see about that in the coming months. However, there appears to be one major element lacking in the emerging scenario here in South Korea. It is called Google, and more specifically Android and the Open Handset Alliance. According to reports, Samsung's forthcoming WiBro phone operates on Windows Mobile. This does not bode well for its success in the marketplace, if the example of the Apple iPhone is to be taken seriously. There is a coming battle among mobile platforms and at this point it will probably eliminate Windows mobile in favor of more open platforms ---Apple iPhone, Android and Symbian. So, I suggest we all wait to see whether Samsung and LG take the bold step of introducing Wi-Bro enabled phones for the Android platform.

Will Convergence Lead to Free Voice Telephony?

In South Korea, internet telephony is poised for explosive growth over the next five years. As anyone who has experienced the convenience and economy of a service like Skype will already know, consumers are likely to go for internet telephony in droves. An article in today's Korea Times points out that the Korean government is expected to adopt number portability as early as next month. That policy will allow telephone subscribers to switch to cheaper VoIP services without changing their numbers and offer new possibilities for companies like Hanarotelecom, which has been struggling to strengthen its share in the saturated fixed-line market. Although Internet protocol television (IPTV), has been getting more attention in the Korean media, some analysts believe that VoIP offerings could make more of a difference in the competition between bundled services. The Korea Times article notes that "The local VoIP market was valued at about 255.2 billion won (about $251 million) last year, according to an estimate by IDC Korea, but forecasted to show an annual growth of about 53 percent for the next five years."

With the introduction of VoIP and IPTV services in Korea, the major providers are planning to bundle services and offer steep discounts. Some are expected to offer free calls between subscribers to their VoIP service. However, the article reports that KT is not planning to do so, "... fearing a massive drop in average revenue per user (ARPU)." In fact, market pressures may force KT to offer free calling sooner rather than later. South Korea seems certain to be one of the first markets in the world to test the viability of something many analysts have predicted: free voice telephony.