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September 12, 2005
Why eBay-Skype Could Be AOL-Time Warner
Posted by Dana Blankenhorn
Skype, like most VOIP companies, is a tax arbitrage play.
The idea is that you avoid the tax costs of telephony by running your voice calls over an Internet connection. As everyone gets broadband, telephone service dies a natural death.
But neither the Bells, nor the governments they feed, are willing to go away quietly. I've written often about how it's done here. But it's done everywhere.
The same day eBay announced it would buy Skype, China started cracking down harder on Skype, and its Internet-Phone version SkypeOut. Unlike the situation with, say, Falun Gong, this is an effort where telephone firms are, not reluctant, but eager co-conspirators.
Thus, Infoworld reports, customers who persist in using SkypeOut for long distance are having their Internet service cut-off, and Skype itself is insisting it doesn't sell SkypeOut in China.
The struggle for VOIP is a political struggle, as much as it is a technological one. And eBay is vulnerable to pressure on that front, in ways that Skype by itself was not.
This talk of "synergies" is starting to smell a lot like AOL-Time Warner to me. The more I hear it, the more it stinks. (Especially when you hear the good news that continues to come out of Paypal.)
Comments (2)
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Dana Blankenhorn has been a business journalist for over 25 years and has covered the online world professionally since 1985. He founded the "Interactive Age Daily" for CMP Media, and has written for the Chicago Tribune, Advertising Age, and dozens of other publications over the years.
1. Marc on September 12, 2005 03:50 PM writes...
You are absolutely correct in your opinion that VoIP is a political struggle. It's much the same with other things. Imagine what would happen to broadcast mediums if the average home user had as much upstream bandwidth as he has downstream. The acceleration of data flow would be the most disasterous thing ever to happen to anyone who seeks to constrict, monopolize, or otherwise unfairly profit by placing themselves in a position that would make them an unelected middle-man.
I use Vonage now for my home telephone service, as well as for business, and I'm very satisfied with it. I would have actually picked Skype save for the fact that Vonage offers me unlimited US long distance and the hardware is more affordable since it's subsidized.
Permalink to Comment2. Jesse Kopelman on September 13, 2005 06:02 PM writes...
A lot of people point to AOL-TW as a classic example of a bad merger, but this is not the case. Remember, it is AOL that acquired TW and not the other way around. I think this was a great deal for AOL, as their stock was clearly overvalued. Now this eBay + Skype deal involves a lot of cash (relative to the size of the deal) and as such has nothing in common with AOL+TW. More to the point, buying TW was a great move for AOL, so why use it as an example for bad acquisitions?
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