Nice article at Bloomberg Markets about Skype, a peer-to-peer, voice-over-IP telephone system which runs on Microsoft Windows, and Apple OS X (and I believe other platforms). I first started using Skype at Azaleos and thought the call quality was good, and generally was satisfied with it. Occasionally though it would totally freak out, which may have been due as much to the vagaries of setting up the little-used microphones on PCs as due to any problems with network congestion. I find the quality and reliability of Vonage to be better than Skype, but not by much.

About the only serious problem I have with Skype is the general problem that I really hate talking on the phone. I think it's a carry-over from being the target of 200,000 IBMers who wanted to bitch daily about anything Internet related and felt that I should be the one to take the call. With Skype the problem is that you can be listed in the directory, or not at all. Maybe it's just a peak into a world I'm not familiar with, but with my privacy settings wide open I was getting skype-calls and IMs regularly from people I didn't know at all. Now I have my settings set to block anyone who isn't in my contact list from calling or messaging me.

Skype was founded by the same guys who created the Kazaa P2P file sharing service. They get revenue from selling SkypeOut minutes (use Skype to call non-Skype numbers) and SkypeIn (call a Skype user from a non-Skype system).

Like Kazaa, Skype relies on peer-to-peer technology, which taps the computing power of participants’ PCs. There are no costs for centralized servers, switches or other equipment. Calls within the Skype network are free, and calls to regular telephones are cheap.

I've used network based telephony off and on for years, starting with an IBM product for OS/2 which I vaguely recall was named "Person-2-Person/2" or, ironically, P2P/2. P2P/2 was a collaborative work application, built around OS/2's multimedia features. It had a shared whiteboard, shared workspace, and voice-over-network capabilities. Today it would probably be a great tool, but in 1995-1997 it was as slow as a mule in the Mojave desert (I'm presuming that's really slow, having never seen a mule in the Mojave). The voice quality...well, it didn't suck, but it was tinny and frequently dropped out, regardless of the network protocol in use (it could use either APPC over SNA or TCP/IP).

I briefly tried using Yahoo! messenger's audio chat in the 1999-2000 timeframe when I was travelling to and living in Sydney, Australia. Was better than P2P/2 but still not great, even over the ginormous internet bandwidth we had in the Olympic's ITCC to my mother's broadband system in the U.S.

The difference with Skype is that your call gets routed through many computers. I'm guessing it's possible that the same packets of information get routed in parallel, but perhaps not. But, where in the past one client either connected directly to the other client, or the two clients connected to a third-party central server, Skype connects your client to multiple intermediary clients between you and the person you're Skype-ing.

By making the connection more complex it becomes more reliable. If an intermediary network drops out (errant backhoe, evil squirrel, etc.) the software immediately switches over to another parallel network connection between two other computers. You might here the call drop briefly, if anything at all.

Now, if your broadband connection drops, then you're out of luck entirely. My DSL connection is very reliable, yet it drops maybe once a day, just for an instant. Since that's the only path out, there's no backup path for the network to take and the call drops (To be fair to my DSL provider, some times it's my flaky router which freezes up when it overheats).

Now, note one word in that last graph: broadband. Skype has been possible for years, but what makes it successful is the widespread deployment of broadband in homes and businesses.

Five years ago most homes in the US were just beginning to hear about broadband, and who in their right mind would pay over US$100/month for the ability to read email or surf the web 舜faster̵d;?

Now, the price has come down (though for how long is uncertain since the FCC just switched the classification of DSL). More small-medium businesses are connected via broadband, where five years ago their only option was a T1 or flaky ISDN line. More homes have broadband, because the kids need it for school, and the parents need it for work.

Skype takes advantage of this: when you're not using Skype, it's still using your connection. It's using your computer as one of those intermediary computers to route calls through. There's no such thing as a free lunch, and the cost of using Skype is sharing the burden of the traffic. Otherwise Skype is free of financial costs (unless you use the added features).

To be clear: when you install Skype, you install an application which automatically routes other people's network traffic through your system. This alone is not a bad thing, but it's something to be aware of. Assuming the Skype software solely allows data traffic, then it should not serve as a vector into your system for viruses, worms, or computer criminals.

Back to broadband: the growth and prevalance of broadband, always-on connections, is fertile ground for many new applications comparable to Skype. The next killer-application I expect to see would combine Bittorrent (background distributed download manager) with a professionally managed video channel. Why pay cable companies to carry your specialized channel when you can bypass them and go directly to the consumer? Cable companies had a chance to lock in customers with flexible channel offerings and ala carte subscriptions, but they appear to have rejected that totally. Now they are going to lose the lock on distributing content that they've had, it may take some years, and no I'm not predicting the complete end of cable TV. But if the goal of a content producer is to get content in the hands of readers and viewers, why not bypass the intermediaries who control the channel allocations and advertising slots?

Skype is the first wave of these applications which can only exist and can only succeed in an always-on, broadband universe.