Skype Gains Clout As Long Distance Supplier

Long-distance VoIP telephone traffic has been growing at a scorching pace and the chief beneficiary has been VoIP provider Skype, which is now the world's largest provider of long-distance communications, according to telecommunications market researcher TeleGeography.

In a report released this week, TeleGeography said Skype's international cross-border telephone traffic grew 41% in 2008, while the entire international phone traffic market has grown at a much more modest pace.

"Skype's traffic growth has been remarkable," TeleGeography analyst Stephan Becket said in a statement. "Only five years after its launch, Skype has emerged as the largest provider of cross-border voice communications in the world." The market research firm estimated that Skype accounts for 8% of the world's long-distance calling market share.

On Monday, Skype, an operating unit of eBay, announced that it will begin using Session Initiation Protocol in a new service aimed at small and medium-sized businesses; the move is likely to be an additional driver for Skype's long-distance service. In addition, VoIP including Skype is taking off in some European countries. Earlier this month, TeleGeography said it expects Europe will have 45 million VoIP users by the end of the year -- up from 30 million in a little over a year ago.

Mobile VoIP, however, has been very slow to catch on in Europe, possibly setting the stage for another VoIP boom if mobile VoIP can catch on among Europeans.

In spite of the explosive growth of long-distance calling, providers are still challenged by the continuing decline in calling prices and revenue for the sector, which has been relatively flat.

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