PSTN

Skype IPO could be worst-case for telcos

eBay will be spinning Skype off in an IPO in 2010 instead of selling it to its founders. As we had suggested, the founders could not meet the price eBay hoped for, due we’re told to the reluctance of private equity firms to back the transaction.

An IPO for Skype could create a kind of worst-case scenario for telcos and for IMS supporters by almost guaranteeing a flurry of OTT voice services that would force down pricing and margins, at a minimum. We’re of the view that the current central-administration PSTN-like model (including IMS) will be more difficult to sustain with OTT competition unless IMS can be expanded to provide better support for so-called Web 2.0 applications and unless it is opened to more developer innovation.

A number of vendors have committed to this, notably Alcatel-Lucent, but so far no one has completely delivered. Alcatel-Lucent’s Web Services Gateway is a step in the right direction but not a complete solution. Voice competition by Skype and others could also impact ROI of the telcos further, particularly in the mobile space where call costs are still relatively high, especially for roaming and international calls.

Internet security: No easy fix

The issue of Internet security, and in fact of computer security overall, has become more difficult through the years, enough to prompt some to ask whether we need a “new Internet” that is less vulnerable.

Stanford’s Clean Slate approach and other academic programs are hoping to answer the question, but the problem is that these approaches are academic; the Internet is here to stay in substantially its current form because it would be too costly to fix it.

That doesn’t mean that security issues can’t be fixed. The biggest problems come from the presumption of anonymity; addressing and identification data on the Internet isn’t authoritative, and so you can’t “trace the call” as reliably as with the PSTN. Much of that could be fixed by requiring ISPs to provide authentic addresses for all packets, but that movement hasn’t made headway in the Internet world.

Thus, we believe this is (unfortunately) much ado about nothing, though there may be some incremental steps suggested by the work.