Russian Telephony Operators Panicking over the Skype Threat

Today I have seen a very interesting report published by a participant of a meeting of the major providers of communication services in Russia where the challenges posed by VoIP services were discussed. After reading the report, it now seems to me that telephony operators in Russia are in a state that can already be described as panic over the entire situation with growing popularity of the VoIP services, Skype in particular.

And they have plenty of reasons to worry as after certain calculations they now know what damage can be done to the industry they work in by VoIP providers. For example, they calculated that the entire communications market could shrink from $2.6 billion to $0.26 billion only in 2008 if the long-distance and international calls were all processed by VoIP providers instead of traditional landline and mobile service providers. This would have obviously been a disaster for the industry and the existing players are more than determined to fight against the possibility of this nightmare turning into reality.

One of their obvious targets is Skype as they look in awe at its immense popularity in the world and in Russia as well. Here in Russia I have not heard of any cases of mobile carriers preventing certain applications from being installed on any mobile devices – simply because you rarely buy a phone with a contract here so your carrier will rarely know what device you use and what type of applications you run on the device. But while they don’t practice any open measures of protection against VoIP applications when used on the mobile devices as a replacement to traditional (extremely expensive compared to the US) telephony services, they are more than determined to fight back and prevent the newcomers from grabbing a significant market share from them.

Of course there are two obvious ways from traditional service providers to go:

1)      provide the same services to their own subscribers and give them a choice between traditional and VoIP calls (and lose some portion of income as VoIP calls will obviously be cheaper); or

2)      defend their own position and investments by fighting against the VoIP service providers using all the measures available.

Of course the first road is much better for the subscribers as the more competition – the cheaper the service. But even if they decide to compete, doubts are here about how fair this competition will be. For example, there are rumors that Skype could actually be banned in Russia unless the eBay company agrees to monitor their traffic and provide all the information on the calls to law enforcement agencies should they need such information. This is a requirement to all the communication service providers in Russia and this could easily be used against Skype here as well.

And while it is obvious that this is nothing but an excuse, it could be used at any moment of time to eliminate competition. This paranoia over lack of control over VoIP traffic (should such control be needed for law enforcement reasons or whatever) combined with how unhappy everyone should be about Skype making money in Russia without paying taxes here and without investing in the communications infrastructure could obviously bring Skype to some poor results here. Unfortunately I don’t expect any fair competition here but tons of internal protection of local service providers once the authorities are persuaded that Skype and other similar services are dangerous for the local market.

Whatever the future brings, I have no idea how I personally could live without a Skype account and without it forwarding all my calls to my US number to my cell phone in Russia – and there are already millions of people here who rely on Skype for their personal or business needs. So it will definitely be a shame to see news articles titled “Russia bans Skype to protect local mobile carriers”.

Via (in Russian), photo credit