ON SKYPEOUT GOING FREE IN NORTH AMERICA

FREEFALL

Well, the number one story on TechMeme right now is that Skype, a division of eBay, has made it free to call any US/Canadian telephone number (land-line or mobile), from the Skype service. 

That is to say, it's SkypeOut service is free within North America. 

Why is this significant?  Well, letting the Skype folks explaining it themselves:

"As far as we know, this is the first time in history when unlimited calls to a standard telephone network are free without any form of payment or subscription. That’s kind of cool."

The caveat?  Well it's free, at least until the end of 2006.  Again, from Skype,

"The only condition is that we have said free SkypeOut within the US and Canada is guaranteed to last until the end of this year — that is, until December 31, 2006. We’re not quite sure yet what we will do after that. Maybe we extend the free period, maybe not. You’ll hear more about this towards the end of the year."

Why would they do this?  Well, a couple of reasons come to mind:

1.  Mainstream portals like Yahoo!, AOL and Microsoft's MSN are aggressively implementing internet telephony features within their instant messaging clients (see earlier post).

2.  Skype, despite being hugely popular in Europe and rest of the world, is still not as widely used by mainstream folks in the US.

So at it's simplest, this is a short-term, customer acquisition move.

It accelerates further the trend of voice communications by itself becoming a commodity application on devices.

And it hopefully encourages ordinary folks to put up with learning a new way of talking to people, despite years of using the regular POTS (plain, old telephone service) lines having made that experience almost second nature.

And all that is a good thing.  Even though it takes another leg away from the Skype business model, if only temporarily. 

But that's something for eBay shareholders (like yours truly), to assess.  One mitigating factor on the cost side of such a customer acquisition move is that it's limited to North America.  As Om Malik points out:

"...in Canada and US, the termination costs are so low... the overall costs of a marketing stunt like this aren’t high."

Nice coincidence that North America is also the place where Skype needs to ramp up it's mainstream subscriber base.