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back to article VoIP is Dead. It's just another feature, now

Business-wise, Skype is a basketcase. But that's just one of the things that makes it one of the most emblematic companies of our time - a real, Ur-Web 2.0 company. Like so many internet companies, Skype has millions and millions of users. Like these internet companies, too, it can't make very much money off all these users. …

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T-Mobile Data

T-Mobile has been offering a flat rate 3G/GPRS data rate for the past 2+ years. Unfortunately, this did not manage to kill hotspots despite the fact that decent speeds are available via t-mobile at many 'hotspots'. I use it on the train daily between Stirling and Edinburgh with no real issues. Get a 3G signal most of the way.

If only the fleecing gits would do reasonable-priced mobile data while roaming, I would never need to use a hotspot again.

Nigel

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Pirate

Fatuous optimism

it has always been about the "last mile".

that whatever-to-the-premises (WTTP - look, i coined an acronym!) medium has always been a monopoly, as long as there have been incumbents. it will probably continue to be so, until that WTTP is commoditized and delivered competitively (which seems unlikely for wired media).

in the US, incumbents have corrupted the regulatory regime to the point where they have no prospects of significant competition for that WTTP. barring what contract lawyers call a MAC (material adverse change), this will likely continue.

i was always skeptical of the idea that VoIP will be revolutionary for the consumer. end-to-end QoS is still uncommon enough to be expensive at the consumer level, and there is no incentive to light enough fiber to deliver contention-free bandwidth (which would make QoS unnecessary); Verizon is the only carrier running fiber to the curb. because VoIP is so vulnerable to latency, it was always hostage to the owners of the WTTP.

it is amusing to read the techno-utopians' fantasies. technology is especially prone to bubbles, because deep knowledge and broad understanding of the context in which every technology is adopted (or not) are very uncommon. fortunately, there is always a reality check at the end of the bubble (listen for the "pop", watch Vonage slowly go bankrupt paying patent fees to the incumbents). unfortunately, many people lose their jobs, their money, or both.

Alan Greenspan called it "irrational exuberance". for anyone who still thinks this bubble is the real deal, i have some tulip bulbs to sell you, they're going to take off big real soon...

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Tautology, symbology... I'm the guy with the VOIP.

"3 probably averts the catastrophe of becoming commoditised, where it might simply be the nameless pipe provider"

"3" is not a name, it is a number. Ask Number 9 about that, if you can get onto the island (and back off it again).

Thus it is demonstrated that 3 is already a nameless pipe provider.

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Skype was a deadend business plan from the start

But not for the reasons mentioned in the article.

Skype was the most braindead web2.0 business plan ever.

Their potential revenue is inversely proportional to the number of members they have because member to member calls are free.

So the more members the higher the likelihood that both will have skype and therefore one will not have to use any skypeout credit to call the other.

They have already demonstrated that their ultimately scalable p2p network doesn't scale if a good portion of clients try and log in to their authentication servers at the same time. Also p2p or not new members translate to higher support costs etc.

The only reason skype is still here is that ebay can't face the embarrassment of shutting it down after paying so much for it.

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@b shubin Re: Last mile monopolies

<quote>

it has always been about the "last mile".

that whatever-to-the-premises (WTTP - look, i coined an acronym!) medium has always been a monopoly, as long as there have been incumbents. it will probably continue to be so, until that WTTP is commoditized and delivered competitively (which seems unlikely for wired media).

<quote>

The whole point is that here we're talking about wireless (i.e. cellular) connectivity, so...

(a) your notion of "whatever-to-the-premises medium" is somewhat misdirected - we're talking about "whatever-to-the-person medium", i.e. connectivity for people out and about

(b) in much of the western world there isn't an incumbent cellular monopoly - here in the UK we've five competing cellular networks. Of course all those cellular networks are pretty unwilling to just become a wireless internet pipe (or should that be a raining cloud?) akin to an ISP - which is fundamentally the issue that the article was all about.

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@Tim J

"here in the UK we've five competing cellular networks."

That is a temporary situation. Since Gordon is mad about free markets being allowed to implode in whatever way they see fit (AKA "ingenuity of the markets"), and the Tories are as usual exactly the same, we will eventually have one cellular network. That's just how Darwinian Capitalism (doesn't) work.

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Alert

Plus ca change

@ Tim J

i named it WTTP because the customer is now the premises, no matter where that is. the last mile to the mobile phone is a cellco monopoly. now, i did say "in the US", in case you weren't reading or paying attention, so i am discussing the US problems with consumer-level VoIP, like it says in my post. much of it still applies to other countries, perhaps somewhat less so to the UK.

wired or wireless, a connection is owned by one company, and that company provides connectivity for the service of no other carrier. one can switch carriers, but one has to get a SIM or phone that is locked to the new carrier, who again has exclusive control over the WTTP, the premises being wherever one is at any given moment.

mobile access is not ubiquitous in the US (and in many other countries), so where the user is, makes a big difference (thus the idea of customer as premises, a geographic location); just ask anyone who has a Nextel phone. in some places, one's carrier has no service, and another carrier may - but the user has no service except if the cellco allows one's phone to roam to the other network, provided the two cellcos have an agreement and/or the user has a compatible unlocked phone (and they usually charge a premium for roaming, when they allow it at all). the cellco owns the spectrum, so they own the last mile to the mobile device.

there is more competition than in the wired market, but not by much, as spectrum-licensee oligopolies create the same lock-in situation that enables dominant wired carriers to kill and/or eat the likes of Skype and Vonage with impunity.

there are parallels between the mobile and the wired markets, which is what the article was about, and it mentioned Shirky's thoughts, which i'm guessing you didn't read. perhaps another attempt at the article is in order for you, you seem to have missed some of it.

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(Written by Reg staff) Bronze badge

Mad about Markets?

Robert -

from http://www.theregister.co.uk/2007/10/25/labour_anti_roaming_cap/ -

Documents exposed by The Times show that the UK's Labour government worked tirelessly to try and prevent the EU capping mobile phone roaming rates, a move which cost the industry millions.

The chatty nature of the emails seems to indicate a close working relationship between operators and the government's negotiating committee, with one message to Vodafone reporting that the "UK [are] still not happy bunnies" when the EU said it was going to take a tough line with the operators.

--> The Times

http://technology.timesonline.co.uk/tol/news/tech_and_web/article2733670.ece

“MH thought that the industry could have moved faster and earlier but said that she was two thirds on their side!”

Most enlightening, no?

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Three instead of WiFi? Not yet.

I tried one of Three's USB wonder gadgets. At home it showed 3/5 bars of 3G goodness, and connected at 44kbps (as in "rather a lot slower than a V.90 modem with nice boing noises"). Works was a little better, but with 5/5 3G bars I was still only getting 300kbps, and that was pretty intermittent.

The gadget went back the next day for a full refund. From the resigned reactions of the 3 Store staff, this wasn't an unusual occurrence. Don't sell the bike shop, Wilbur.

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Happy

Why is it always about big business.

"web 2.0" isn't a failure just because it isn't making people filthy rich.

This it the pattern I am seeing.

Someone comes up with new venture. Chances are it relies on user generated input, user bandwidth and or making a formerly expensive service dirt cheap.

People get excited by the new venture because it is new, exciting and of enormous values to its end user.

A bunch of those excited people happen to work for a big company, which then writes a very big check for at least 10 more money than the venture is able to replay.

A year or two latter everyone realizes that being new, exciting and valuable to the end user doesn't magically equate to huge profits.

Now its time for every one to say that the venture was crap because it didn't do the one thing that seems to matter. Make rich people even richer.

---

Meanwhile I am going to made some long distance phone calls to my family via Skype for $15/year (I pre-ordered).

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Skype failed because it's crap

Plain and simple. Calls drop. Users who are online don't show up. All due to the wondrous P2P architecture, replacing one point of failure that Skype could control with many simultaneous points of failure that they can't. Although Skype In numbers would also fail without warning and be down for hours, so maybe it wouldn't have made much difference.

We tried running a small business off it and it was useless, even for sending messages across the office (due the aforementioned missing user issue). I gave Skype money, but they sure didn't make it easy, and billing was nightmarish for more than one person.

And to top it all off it doesn't use SIP (like this article states) but a proprietary protocol. So the legion of hackers who thought it a Good Thing when it launched couldn't get involved. Argh!

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Flame

Skype had one glitch so far, I wonder how many '3' had since roll-out?

"a real, Ur-Web 2.0 company." --- really? I couldn't find that on the company's manifesto. Get ur glasses mate, Skype is a communication device in the form of a software period.

"Think of Skype as a kind of parasitic virus that threatens to bring the host to its knees" --- cool, that's the idea. When you are at home using broadband or have wifi somewhere else, just use Skype coz it makes more financial sense, £0!

"Well, Skype has no network of its own" --- has no "physical" network of its own. That's the point, it uses the incumbents' network in a p2p fashion, that's how those filesharing software work, but Skype sends voice data packets instead of hmm (illegal) filesharing data packets.

"And because Skype has next to no income," --- You got any proof of that coz Skype has a host of fee-paying services. I don't use all of them, but i use the pay-as-u-go option, more when I'm in a different country, Skype beats roaming charges.

"and because its users can melt away as rapidly as they joined, it has no chance of attracting the capital investment needed to build a real network of its own" --- customer loyalty, you really have to prove that! I joined Skype after reading an article in The Economist boasting the voice quality and reliability of this software. I have been with Skype since v1.0 and got a lot of people to use it too, starting with my folks who live on the side of the planet (am in London).

"...Skype, it found its fool in the shape of Meg Whitman of eBay..." --- I think it's safer to say that eBay is still figuring out a good business plan to make money out of Skype (post acquisition). It's not as simple as auctioning gadgets/clothes u know and you can't expect a financial miracle this soon.

"Hutchison has been pushing VoIP to the trapdoor for a while now." --- it's been a defensive move adopted by most Telcos. They want to block Skype traffic coz they know what Skype did to the landline Telcos. Whether this move is right/legal to do so is something else. If you want an analogy, think of Microsoft. (I have a feeling that you (the author) are biased towards 3-network, are they paying or something?)

...ok it's 3.41am, am done with page 1. Can someone finish this guy off?

PS. "Having a 3 phone pretty much marks you out as a cheapskate." - I think cheapskate is wrongly used here, you probably meant "Having a 3 phone pretty much marks you as having a lack of common sense." 3 network, back in the days, was pretty much the most unreliable network i've ever used. Go outside London and u'd wish u had a non-3G phone. Using a mobile network to channel data, get out of here, it's a poor choice (so far). 3G! Crickey!

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VoIP != Skype

In contrary with popular beliefs and press bs, VoIP is a lot more (and somewhat different thing than) Skype.

Even though I can fully agree, that Skype is more-or less a bubble, that may pop or it might just deflate (perhaps lingering on like ICQ. Anyone remember ICQ? :) ) it is NOT VoIP. Or rather, VoIP is not Skype.

VoIP will just get back to where it belongs: behind the screens, making your calls work, without you being much aware of it's existence. It might be powering your desk phone in the office, it probably is behind your el-cheapo long distance calls and maybe you or a geek friend is running a home PBX on Asterisk.

Saying that VoIP is dead, is like declaring HTTP dead when Netscape went out of business ...

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Skype Cheapskates, Use VOIPBUSTER.

If you want a decent voip solution then you should be prepared to pay something for it. Voipbuster has the solution check them out. No i dont work for them, just really like the service after being frustrated with the likes of skype.

www.voipbuster.co.uk

My girfriend has just moved to china. I plug my house phone into my routers VOIP socket, (Speedtouch 780) I credit them with a few euros (via pay pal) and then I can call her china mobile for an hour for about 40p. If I want to call from my mobile I dial the the london access number and im using up minutes from my talk plan while voipbuster gets 0.007p per min. Yep it cost me 0.007 pence to call from my mobile in the uk to her mobile in china for the grand old sum of 0.007pence per min.

Its crystal clear it doesnt need a pc at either end, I get through every time, it costs pence. No echoes, no delays, Its VOIP. Its better than skype.

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Here's to Objectivism

Andrew,

I am huge fan of your snarky style of journalism.

I love the way that you exist for your own sake, neither sacrificing yourself to others nor sacrificing others to yourself. The pursuit of your own rational self-interest and your own happiness is the highest moral purpose of life.

It is great to see that my work is now spreading across the pond.

Keep Up The Good Work,

Ayn Rand

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Stop

That's the point!

["Think of Skype as a kind of parasitic virus that threatens to bring the host to its knees" --- cool, that's the idea. When you are at home using broadband or have wifi somewhere else, just use Skype coz it makes more financial sense, £0!]

Financial sense for the user, but not for the network. When you are buying broadband, you are just buying a pipe with no additional services. When buying mobile, you are buying much more, and the mobile business model depends upon you using these additonal services. Why should the mobile network support a free competing service which could consume all the bandwidth?

["Well, Skype has no network of its own" --- has no "physical" network of its own. That's the point, it uses the incumbents' network in a p2p fashion, that's how those filesharing software work, but Skype sends voice data packets instead of hmm (illegal) filesharing data packets.]

Exactly, it doesn't have a network, so it can hardly complain when the network owners choose to limit it's use!

["And because Skype has next to no income," --- You got any proof of that coz Skype has a host of fee-paying services. I don't use all of them, but i use the pay-as-u-go option, more when I'm in a different country, Skype beats roaming charges.]

Compared to the mobiles (making £100's from each user), skype makes a few pounds from each user.

["and because its users can melt away as rapidly as they joined, it has no chance of attracting the capital investment needed to build a real network of its own" --- customer loyalty, you really have to prove that! I joined Skype after reading an article in The Economist boasting the voice quality and reliability of this software. I have been with Skype since v1.0 and got a lot of people to use it too, starting with my folks who live on the side of the planet (am in London).]

The thing is, Skype is just software, which means that another will be along anytime soon. Remember how the search engine of choice was Altavista, then yahoo, now Google? Internet users are very fickle, when all you've got is an internet brand, then you've got nothing.

["...Skype, it found its fool in the shape of Meg Whitman of eBay..." --- I think it's safer to say that eBay is still figuring out a good business plan to make money out of Skype (post acquisition). It's not as simple as auctioning gadgets/clothes u know and you can't expect a financial miracle this soon.]

If there was 'real' money to be made, then it would be making it. The fact is Skype have changed the market by making the fixed line Telcos cheaper, but that's about it.

["Hutchison has been pushing VoIP to the trapdoor for a while now." --- it's been a defensive move adopted by most Telcos. They want to block Skype traffic coz they know what Skype did to the landline Telcos. Whether this move is right/legal to do so is something else. If you want an analogy, think of Microsoft. (I have a feeling that you (the author) are biased towards 3-network, are they paying or something?)]

Of course the Telcos want to block the traffic. It's a competing business which is trying to use *their* network resource free-of-charge. Do you have any idea how much it costs to design, plan and build a single radio mast? How about the core infrastructure? How about the original spectrum licenses? Why should the networks provide this free of charge to a competing business. How does this differ from Marks & Spencers stocking clothes from 'Next', providing the shops, sales staff, heating, lighting, but then giving all the profit to 'Next'? As consumers we wouldn't expect M& S to do this, so why do we expect Telcos to do the same?

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(Written by Reg staff) Bronze badge

Re: Skype Article

Ray (anon) - those two issues are well known. Video across borders? That's a showstopper :-)

My point here is, "What's the business case for public WiFi when 3G Data is £7-£10 a month?"

I can't see one. Drop me a line when you dream one up, I'll promise to have a look.

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(Written by Reg staff) Bronze badge

Now I'm worried about "Natasha"

"...ok it's 3.41am, am done with page 1"

Would you like to try again at a more sensible hour, 'Tash, this time using stuff like evidence, logic, deduction?

You nicely prove my point that people prefer utopian fantasies to real economics:

> it's been a defensive move adopted by most Telcos. They want to

> block Skype traffic coz they know what Skype did to the landline

> Telcos.

Now check AT&T's revenue against [> INSERT BASKET CASE VOIP COMPANY < ] here.

> --- I think it's safer to say that eBay is still figuring out a good

> business plan to make money out of Skype (post acquisition).

Uh, huh.

Can I sell you a bridge?

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'Excellent network'?!

I have to question your assertion that 3's network is excellent and 'covers most of the country'. It's not particularly great - 3G is still some way off its touted broadband speeds - and 3's coverage is pretty patchy outside urban centres.

Notwithstanding that, a very interesting article, and one wonders what the implications might be for Apple/ O2's 'free Wifi, but you have to pay £35 a month for the tariff' idea.

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Black Helicopters

Was this about skype or the thinking power of 3?

""here in the UK we've five competing cellular networks."

That is a temporary situation."

So the government can trace every member of the population via their centrally controlled network??

I smell the paranoia of black helicopters.

As for Skype - it was a lemon from the start, a function that is more beneficial attached to MS Messenger and Yahoo chat as opposed to being a standalone product that doesn't make money.

Skype is in tatters and the future of VOIP (at least in the UK) is BT's 21CN and VirginMedia's fibre optic network.

Once 3 proves how awful Skype is for the masses, the mobile networks will be able to continue like nothing happened.

I don't believe we have seen the death of the WiFi hotspot, with the increase in sales of laptops, all wifi needs is another advancement in speed and stability.

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The future of VoIP is...

as Zoltan already said, not in the mass market.

Why should VoIP be visible to the end user? The mass market just wants cheap calls with reasonable quality, and there are plenty of ways of achieving that without involving the hardware and/or software complexity of a VoIP setup. Think about the number of videos, microwaves, etc whose clocks aren't set right, and that shows you how the non-geek mass market views unnecessary complexity.

From an ordinary phone I can dial 4 digits (a few more from a mobile) in front of an ordinary local or international telephone number and get VoIP-class prices without needing a subscription of any kind. Why would I want the hassle of VoIP instead of that convenience?

In countries where mobiles are becoming a substantial proportion of call *destinations* (some folks allege that's the case in the UK), how does VoIP help save *anyone* money (caller or destination)? It doesn't - the cellco still wants its per-minute termination charges You can't avoid them unless the destination also has compatible VoIP AND the caller knows the relevant incantation to get to the called party's VoIP AND every link in that chain is working right at the relevant time. Phones just work, when they don't work it's news, as recent Reg coverage will prove. Skype not working is only news when the whole network falls over for days.

I've got a bit of network-related Clue, and unexpectedly acquired a 3G phone with SIP capability a few weeks back. I haven't bothered setting it up, and if I do it'll only be "because it's there" - it offers me little benefit, just extra hassle.

Consumer VoIP is not going to see "critical mass" before it fades away till the next time it's resurrected and rebadged.

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Stop

"Not in the mass market"

You've got a bit of a clue certainly - user experience is one of the main drivers.

However, you've mixed up the current user visible aspects of VoIP with the technology behind it. If/when your standard phone can differentiate between a VoIP destination and normal (without you knowing) and call appropriately, it'll start to take off (assuming things like latency get fixed).

Someone above is already using a normal phone with their ADSL router to get cheap calls. They've had to set this up, but there's nothing stopping the ISPs making deals with VoIP providers to provide this "off the shelf". Add to that the fact that there are some SIP/wireless phones being shipped already and you're heading towards "transparency".

At that point, someone has a wireless phone that works - similar to DECT phones now - and it's VoIP. VoIP isn't dead - it's everywhere... but the user doesn't have the clunky front ends that exist now.

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@ b shubin

Just because Merkins have a dysfunctional mobile market where different networks are technically incompatible with each other, you have to resort to roaming within your own country, where there are geographical pockets of monopolies depending on who greased whose palm in the spectrum auctions to keep other carriers out, and where you are only just getting to grips with SMS nearly 10 years after the rest of the world... it doesn't mean the rest of the world is like that.

Most of the rest of the planet have the GSM standard, we have damn near universal coverage, we have multiple operators competing for our business on standard handsets (operator locking notwithstanding and easily circumvented by your local dodgy geezer), and as a result your average European and Asian toddler can now txt faster than many Americans can think.

3's move shows that VOIP is being subsumed into the old-skool telcos, Skype's business model was always doomed as the price per minute zooms towards zero, the money of the future is in a flat monthly fee for unlimited service over their valuable wireless spectrum, and 3 is just getting there faster than others. It has fewer customers and therefore less revenue to lose than the other operators so is less scared by this prospect.

Flat fee unlimited service is a place all the operators will have to go eventually to survive, some will just get there faster than others.

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@Ayn Rand (& sundry philosophers)

You (Americans) are just trying to sell us (Europeans) back our Nietzsche. Now where have I seen that before? <shrug>

@Christopher Rogers: "I don't believe we have seen the death of the WiFi hotspot,... all wifi needs is another advancement in speed and stability."

That's like saying the tortoise can beat Achilles if it gets a kick up the backside - you'll be disinterring Zeno next in pursuit of your argument. Let sleeping dogs lie. The future's bright, the future's HSPA, HSDPA, HSUPA, I-HSPA, HSOPA...

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@ Luther Blissett

your an idiot. You also appear to be a geek who is focused on speed. Rem VHS v Betamax? it was the end user who decided that one. Wifi isnt dead because it has demand. It may not win out in the end, but can you be sure HSPA, HSDPA, HSUPA, I-HSPA, HSOPA... will?

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This post has been deleted by its author

Doesn't hurt 3's bottom line

3's coverage is far from excellent: it barely exists outside of the urban population centres and is carried by O2 in rural areas. As 3 is an otherwise independent carrier it must be paying for interconnects outside of the country too, which is where using Skype comes in. Moving overseas calls onto the switched data network should reduce 3's interconnect costs. Also it has to be noted that because they are using iSkoot, which is a third party Skype voice client for phones, 3 does not have a relationship with Skype at all, just a method of using their network (iSkoot is 'Certified for Skype', whatever that means). It's the first step not to killing VoIP but to integrating it with the calling network, billing it alongside regular mobile calls and routing overseas calls transparently across the Internet while counting the packets and putting them on your bill. In that light, the VoIP companies with a rack full of Asterisk servers aren't offering the service for altruistic reasons: they smelt the coffee and are now waiting to be taken over and integrated, so VoIP as a technology isn't dead, but it will be absorbed into the system as part of the phone company's future.

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Happy

More info

And since yesterday's launch for some reason "more info" about flagship 3 product as referenced from three.co.uk main page is hidden somewhere in their intranet at 10.39.0.1 and obviously refuses to show up.... =)

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@Anonymous Coward RE: future OF VoIP

I have never stated "the future is VoIP". I'm simply saying the people who control the main landline communications networks are going to be the only salvation of VoIP hence "Skype is in tatters and the future of VOIP (at least in the UK) is BT's 21CN and VirginMedia's fibre optic network."

Do some of you people actually read these comments or just glance over them before throwing in your 2d?

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This post has been deleted by its author

Hey, you missed another story about music pirates!

Although in this case, they are the label themselves.

But I'm certain that has nothing to do with it.

http://www.theinquirer.net/gb/inquirer/news/2007/10/30/fripp-lays-music-industry-rip

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free calls to pstn?

I'm not sure which of these firms is the parasite, or maybe a few users will be

3 has the extra marketing pull of offering the service, but I can't see any revenue for Skype in it at all, as it seems neither SkypeIn or SkypeOut will be supported

But even so, I think it could be possible to find a way to make free calls to PSTN

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