Skype's Business Model

Stewart "Skype Crazy" Henshall, Mitch "Business Blog" Ratcliffe are wondering what Skype's business model will be.

Skype will either go the way of a single global flat rate within their network once they have raised barriers to entry through network effects, or leverage the demand they have aggregated to charge for bridging to the PSTN, something Mitch pointed out as a challenge.

If they choose the latter, its not that much of a challenge technically and they can create intermediate peers in different countries connected to a softswitch to avoid paying for transport.

Skype has realized the geographical arbitrage dream while retaining call quality. Beyond Vonage arbitraging the local loop and originating carriers, it bypasses the need for terminating carriers. See a brief history on telephony arbitrage.

Finally a P2P app where content is self produced. Now all they need is a Mac version. 660k downloads and counting...