Sign on and touch someone

Tuesday, September 30, 2003

TALLINN, Estonia -- The software developers who wrote file-swapping legend Kazaa are taking the concept of peer-to-peer sharing to telecommunications, launching an Internet phone service they claim could put traditional phone companies out of business.

The service, called Skype, purports to offer free, unlimited phone service between users -- with sound quality near to what its developers derisively dub "POTS" -- a Plain Old Telephone Service. Unlike Kazaa, which drew the wrath of the music industry, Skype shouldn't stir up a legal hornet's nest.

"The goal here is that we want Skype to be the telephone company of the future," Niklas Zennstrom, the firm's chief executive told The Associated Press. "Traditional network technologies date back to the 1870s. They're inflexible and costly to maintain."

Skype users can currently use the program only to talk to each other, but it could later be enhanced so someone could call other types of programs, or even regular landline and cell phones, Zennstrom said.

Once downloaded from the company's site and installed, Skype works on personal computers running Microsoft Windows 2000 or XP. It requires a sound card, speakers, a microphone and a high-speed Internet connection.

Peter Firstbrook, a senior research analyst with the Meta Group in Toronto, questions whether consumers would be willing to trade their cell phone, or even landline, for the chance to talk via computers.

Broken network connections could hamper calls, he added.

"There wouldn't be any priority for traffic," Firstbrook said. "If anything, what they need is a purer, cleaner pipe from the network provider and priority within the network."

Decent sound quality

At least some users praised the sound quality, including disc jockeys who use it for on-air interviews at the KUKU radio station in Estonia, a tiny former Soviet republic that sits on the eastern edge of the Baltic Sea.

"The sound quality of Skype is close to the quality we are used to on a phone -- but not better, at least not currently," said Linar Viik, an Estonian Internet consultant.

The service remains marginally useful because Skype users can only use it to talk to other Skype users, Viik said.

"I don't think this could replace regular phones, not now," said Viik. "But it could find a niche, say, in branch offices of the same company."

Although other programs -- including instant messaging programs from Microsoft and Yahoo! -- permit sound and voice transfers, Skype bundles those features and catalogues users in a directory so they can find each other.

The program directs peer-to-peer data through the quickest networks, ensuring that quality isn't degraded. Privacy is ensured through encryption, the Skype Web site said.

Skype claims to operate through firewalls, software used by corporations to monitor traffic in and out of its office computers.

Zennstrom said multiple users could eventually converse with each other, but he didn't say when that would happen or how Skype would be modified to do so.

The basic program is available at no charge, but Zennstrom said a beefed-up version will be sold for an unspecified fee.

Zennstrom, 37, and his main partner at Skype, Janus Friis, 27, first made a splash in 2001 when they released Kazaa, which went on to become the most downloaded software on the Internet.

Although they denied any wrongdoing, they sold Kazaa to an Australian company in 2002 after coming under intense legal pressure from the entertainment industry, which accused Kazaa of facilitating the theft of millions of copyright songs and videos.

Cyber-savvy Estonia is widely regarded as having the most advanced Internet infrastructure of any former communist country. That, plus lower labor costs and proximity to Sweden, made it a logical place to seek designers for the company's software, Zennstrom said.

Even though Skype has no direct stake in Kazaa, Skype uses Kazaa references to promote itself.

Within a week of posting the program on its Web site on Aug. 29, Zennstrom said, more than 15,000 copies of Skype were downloaded. This week, its Web site was claiming 660,000 downloads. Kazaa has been downloaded some 300 million times since its launch two years ago.

"Obviously, you get more attention when you've done something before," he said. "With us, people have expectations."


On the Net:

Skype: http://www.skype.com

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