Skype Slips Into Business

Two years ago, Mark Ehr and a few co-workers began using Skype to communicate between Proxima Technology Inc.'s Denver headquarters and its offices in Sydney, Australia, and Windsor, England. "I'd spent hours talking to Sydney," says Ehr, director of product marketing at the 70-person software company. Luxembourg-based Skype Ltd.'s peer-to-peer voice-over-IP software routes calls over the public Internet, offers good voice quality and supports conference calls -- and it's free, he says.

Soon, top executives began using Skype for internal calls. "That set the tone for the rest of the company," Ehr says, and today Skype is the primary means of making intracompany calls at Proxima. Skype has also allowed Proxima to put off a planned migration to an internal VoIP telephony system.

Driven by convenience and potential cost savings, Skype and other consumer-focused public peer-to-peer calling networks have been quietly gaining ground in businesses, to the delight of some and the chagrin of others. While such public calling networks can cut costs, administrators must also sort through the management, compliance and security implications.

That needs to happen fast. As with public instant messaging services, peer-to-peer VoIP has taken root with consumers, who are increasingly using the programs at work. "Services like Skype are indeed coming into enterprises, brought in by users much in the same way IM services were brought in years ago," says Irwin Lazar, an analyst at Burton Group in Midvale, Utah. Currently, some 30% of Skype clients use the service for business calls, says Will Stofega, an analyst at IDC in Framingham, Mass.

Skype and programs such as Microsoft Live Messenger and Yahoo Messenger With Voice combine instant messaging and file-transfer capabilities with voice- and videoconferencing capabilities, integrating those into a single, proprietary soft client on the desktop. Contact lists are built by sharing user IDs in the same fashion as instant messaging "buddy lists." Most programs can only call users that have the same client, although a few, such as Gizmo, are more open.

Users particularly like the ability to see whether a person is online before initiating a call, says Lazar. "Voice mail is cumbersome and annoying. It's a lot nicer if you can avoid voice mail by sharing presence information," he says.

Skype, which claims more than 100 million registered users, established an early lead in public VoIP calling. It has traditionally offered the best voice quality, although it faces increasing competition. Skype was also the first to offer value-added services to connect VoIP callers to the public switched telephone network (SkypeOut) and to allow users to buy a local telephone number that PSTN users can call to reach a Skype softphone (SkypeIn). "Skype is successful because it just works.... It is easy to use and seamlessly traverses network address translation [devices] and firewalls," says Jeff Pulver, chairman and founder of Pulvermedia, which offers the competing Free World Dialup.

While Skype allows peer-to-peer calling, some aspects of the architecture are centralized. A log-in server stores usernames and passwords. Skype also makes some clients into supernodes that handle call routing for other network traffic. To prevent Skype clients on PCs inside the corporate firewall from functioning in this way, network administrators should configure the firewall to disallow unsolicited external connections to the company's internal hosts. Source: Burton Group, Midvale, Utah

Beyond Free

The advantages of peer-to-peer VoIP go beyond just cost savings, says Stofega. "From a consumer perspective, it's a price game, but from a business perspective, it's evolved into an application, a tool that can help business processes."

For example, Peter Dout, IT specialist at U.S. Robotics Corp. in Schaumburg, Ill., says employees use Skype to communicate from home with overseas offices in different time zones. "You don't have to be in the office to take that Skype call," he says. The company, which also sells Skype-compatible headsets, has formally embraced peer-to-peer calling and even includes a Skype client in its basic desktop system image.

But U.S. Robotics' use goes beyond interoffice calling. Customers can click on a button on its Web site and connect to its call center via Skype. Dout created a single Skype ID for support calls and uses SkypeOut to forward incoming calls from that ID to a regular PSTN number in the call center. Routing calls to the call center through the PSTN allows Skype calls to be logged and recorded just like any other incoming call. "The infrastructure I have set up for this call center all gets used. It's the same as a regular land-line call," says Dout. The configuration also enables U.S. Robotics to manage just one Skype ID for all incoming Skype calls.

For Mary Galbavy, director of customer operations at U.S. Robotics, the key benefit has been cost savings. In the U.S., incoming calls through SkypeOut cost $.017 per minute versus $0.05 via the 800-number support line. The big savings, however, are realized in its European call centers. In Italy, for example, incoming calls over the PSTN cost $0.46 per minute versus $.023 with SkypeOut. Since users also pay a charge when calling in, they have an incentive to use Skype, and 26% of all callers in Italy do so. "We cut our telephone costs by a minimum of 20%," says Galbavy. Worldwide, "at least 5%" of U.S. Robotics' customers are using Skype, and customer use has been growing at an annual rate of 175%, she says.

Proxima's employees also use peer-to-peer calling to avoid toll charges when traveling. Users make calls via their laptops rather than incurring long-distance or cellular roaming charges, especially during trips abroad, says Ehr.