eBay CEO: Skype Will Kill Big Telecom

eBay CEO Meg Whitman had some startling news for stock analysts yesterday: In the future, all phone calls will be free, thanks to VoIP. She sees Skype as the nail in the coffin of Big Telecom. "In the end, the price that anyone can provide for voice transmission on the 'Net will trend toward zero," Whitman bluntly told analysts during the call.

Whitman was defending her company's $4 billion buyout of Skype. She explained to analysts that in the future, phone providers will make money not off of call minutes, but instead by selling ads and upselling customers to services --- such as PayPal, which eBay conveniently owns.

In this new world, those providers with the "largest ecosystems" will thrive, while others will wither. An ecosystem isn't just customers, but developers writing for the application.

Whitman is right. Already, VoIP is driving call costs dramatically lower, and the trend will continue. Companies that think they can make money selling telecom by the minute are whistling past the graveyard.