How Skype/Facebook Will Kill The Phone Network

To a 20-something, the plain old phone network is about as useful as a Fletwood Mac 45.

Art Wittmann

July 7, 2011

5 Min Read
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The likelihood that you're a big Skype user is inversely related to your age. If you're over 50, you probably understand what Skype is, but have never used it. If you're closer to 20, it may be the primary way you make voice or video calls--your cell phone, after all, is really just for texting. So as Microsoft/Skype and Facebook announce their new venture, we baby boomers tend to wonder what all the fuss is about. If you've used Facebook chat, you know it's extremely limited, so it seems like a nice thing that those young kids at Skype and Facebook have gotten together to improve both of their services. But the implications go far beyond a new way for kids to communicate.

I'm talking about relegating the PSTN (public-switched telephone network), and the notion of making a call, to the pile of technology that also houses broadcast TV, your Fleetwood Mac 45s, and now your Michael Jackson CDs.

Most 20-somethings would be just fine with a cell phone that only has a data plan. If they can't text a conversation, it's probably not worth having, and if they really need to elevate a discussion to voice or video, they'd just as soon use Skype, like they do at home on their laptops.

For those out of the know, from within the Skype application you can send text and SMS messages or make a voice or video call. You can also do more advanced things like desktop sharing, conference calls, and videoconferences. You can get a phone number if you want, and you can place calls to other phone numbers--and you're still in the Skype app. You can't do almost any of that from your traditional wired home phone. The one thing the PSTN had going for it that Skype didn't--until now--is ubiquity.

Everyone has at least one of those quaint phone numbers, and so if nothing else will work, you can always make a call. Twenty-somethings do it with their parents, and sometimes do it in the course of their jobs, but they don't like it. The Facebook, Google, and Skype folks all get this, and to its credit so does Microsoft. Not so clued in are the likes of Avaya, Cisco, and many of the VoIP sellers. They tend to want to build many of these capabilities on top of their voice systems, which provide their customers with islands of functionality in a sea of voice-only communications. It's the wrong model, the kids get it, and we're just figuring it out.

If you were scratching your head about why Google would let itself lose the bidding war for Nortel's patent portfolio (and I'll admit I was), this is why. In the short run, Google will have to license some patents for Android. But in the long run, the customers it cares most about won't use the technology protected by those patents, so the company is far better off putting its effort and money into getting into competition with Facebook.

And it's important for Google that it does get into competition with Facebook. While Skype provides various communication technologies, many of which Google already has, Facebook provides the directory mechanism to find the people you want to talk to. One assumes there will be some sort of meeting of the MSN and Facebook directories, and while there's going to be a lot of overlap in those two lists, you'll probably find a billion or so of the most connected people on the planet. That's a pretty good start, and it's one that Google will have replicate for itself and its Android licensees.

I'll admit that I've never thought Facebook was worth its estimated valuation. It's a company with vast information resources--information about you and me--but it also needs to walk an extremely fine line when capitalizing on all that data. If Facebook goes too far, all 750 million of us will go across the street to Google, or some startup that's got some cool tricks. But be that as it may, Facebook is the only entity right now with enough audience to make a deal with Skype a real game-changer for real-time communications.

So what does this mean for the enterprise? In the short run, probably not a lot--though you'd better be letting your newest and youngest workers have access to Skype and Facebook, as they'll use it routinely in their jobs. If you're planning heavy investments in intra-company unified communications technology, you may want to examine just what you're building. Being one of those islands of functionality is going to seem like an expensive yet crippled system in a couple years.

Last but not least, the FCC is going to have to think about its own requirements in this age. E911 capabilities aren't on the minds of 20-somethings, but the service is important and now is the time to figure out how to implement it without ham-handedly restricting the abilities of the technology. The smart folks at Skype would do well to have solutions to propose the E911 issue. The last thing you want is Uncle Sam doing this thinking for you.

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