Motorola to build Skype cellphones

Motorola has announced that it will build a GSM cellphone (the European standard now being introduced in the U.S.) that is also "Skype ready." This means if you are in a WiFi hotspot, you can make calls for free via the Internet. Not in a hotspot? Then the phone uses the old cellphone system.

Skype is a popular free VoIP service that was founded by two of the originators of popular peer to peer services including Altnet and Kazaa. Skype to Skype calls are free, and the company charges for calls made to the old telephone network (i.e. what most of us use).

It's not clear exactly what the future is for services like Skype. The company's software is proprietary, so they control their user base, unlike some other Open Source VoIP services like Free Word Dialup. Skype is popular right now because they have a more finished product that is easy to install and use. Some of the Open Source software is a bit rough around the edges.

I'll stand by my prediction that telephony as a business is dead, dead, dead. In the future, voice calls will be like email--we'll all have it and use it heavily, and it won't cost us a dime to call anyone, anywhere in the world.

Business opportunity: voice and video calls to the moon and to Mars will cost money for a while because of limited bandwidth. Real time calls to the moon will be just barely possible; the latency will make for a slight delay, but it will be manageable. Real time calls to Mars will not be convenient, as the latency will make it very difficult to have a conversation fluidly. According to my calculations, the latency to Mars will vary between about 4 minutes and 20 minutes, depending on the relative positions of the earth and Mars.

You might ask, "What happens to the phone companies?" The phone companies have to recognize that their only option is to think of themselves as access providers rather than service providers. And they are lumbering in that direction, albeit very slowly. The acquisition of AT&T and MCI by local dialtone companies gives the latter the long haul circuits to better serve the access market.

But I'm not at all confident that any of the incumbents will make the transition. They have made it this far by firing all their help and outsourcing everything they can. Most phone companies today consist of some call centers, a billing center, and an infrastructure based on 100 year old technology, and that is not much of a business. I'm exaggerating somewhat, but not much.

What's next? As the phone companies continue to lose customers to VoIP services, look for them to start abandoning services to some communities, starting with rural communities with a high service cost. If your community does not have a plan to get community-managed infrastructure in place, you should. You are going to need it when the phone and/or the cable company pulls up stakes and moves on, sometime in the next 5 to 7 years.