Understanding Skype's reseller model

Skype isn't a phone company. It's an application with a Internet phone services business model.

Want proof? Take a look at yesterday's announcement by Skype that it was changing its per-minute rate to several destinations.

Although the great brunt of the price mods were downward, rates to a few destinations went up. For the record, these destinations are Saudi Arabia, Papua New Guinea, Oman, Lichtenstein and Haiti.

Now read the phrase at the start of the graf in the news release where Skype announced these changes.

"Due to increases from our suppliers..."

"Our suppliers." Got that?

Skype is a reseller. They buy access from local suppliers at bulk prices, and then resell them to subscribers via SkypeOut minutes.