Yes, it is true, Skype calls from users in North America to landline and cell lines in the U.S. and Canada are going to be free for the remainder of this year.That is, of course, cheaper than two cents a minute.
To me this sounds like a strike against more standard, phone-to-network services such as Vonage, as well as rival PC-based calling services from the likes of Yahoo! and GoogleTalk. Overarchingly, this is an effort to build up Skype's North American account base.
I have four questions:
- What happens on January 1, 2007, when a whole bunch of customers who have signed up because of the free dialing, or have become used to free North American dialing by then, get converted back to pay callers? They will know it is coming, but how do you wean 'em off free?
- Is this a true loss-leader, or is there a behind-the-scenes return on investment we don't yet realize? Obviously, Skype has to pay termination fees for North American calls. How, then, do the costs of these fees tie in with expectations that these new customers will become revenue producers now (such as, perhaps, via Skype-enabled eBay transactions which haven't been formally announced yet)?
- What happens when competing services match your offer, or even extend it past the end of the year? Yahoo, Google and others have deep enough pockets to do this.
- Since the only thing cheaper than free is paid, would the next logical point of differentiation be for Skype to pay frequent callers? This could work like cash-back credit cards- use free North American calling for a given number of minutes, and then you get credit, or actual cash back, via PayPal. I sense this is the next step.