Skype’s Share of the Long-Distance Pie is Growing

New data from TeleGeography show that international voice traffic continues to rise, despite the availability of an ever-broader range of substitutes for standard telephone calls. Cross-border telephone traffic grew 14 percent in 2007 and is estimated to have grown 12 percent in 2008, to 384 billion minutes. Due to declining call prices, however, revenues have largely been flat.

While international telephone traffic continues to increase at a modest pace, Skype’s international traffic has soared. TeleGeography estimates that Skype’s cross-border traffic grew approximately 41 percent in 2008, to 33 billion minutes—equivalent to 8 percent of combined international telephone + Skype traffic. “Skype’s traffic growth has been remarkable,” said TeleGeography analyst Stephan Beckert. “Only five years after its launch, Skype has emerged as the largest provider of cross-border voice communications in the world.”

Not all of Skype’s traffic is a net loss for international carriers. Skype’s paid “Skype Out” service, which lets users make calls to standard telephones, generated 8.4 billion minutes of calls in 2008. Skype relies on wholesale carriers, such as iBasis and Level 3, to connect this traffic to the telephone network.

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