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Skype outage shows cracks in VoIP armour
    Globe and Mail  


    August 18, 2007  

A lengthy service outage this week at Internet telephone company Skype could turn some consumers off a technology that is still trying to find a mainstream subscriber base, observers say.

An unknown number of Skype's 220 million registered customers worldwide started running into trouble on Thursday and the problems continued into yesterday. They couldn't log in to their computers to make a phone call.

A software glitch was the culprit, Skype informed worldwide users on its website Thursday morning eastern daylight time. It thought the problem would be fixed within a day. However, while Skype said early yesterday that some clients could access service, it once again cautioned the recovery could continue throughout the day. "We know we're not out of the woods yet, but we are in better shape now than we were yesterday," its website stated.

The outage isn't good news for the fast-growing alternative phone company. Skype made a name for itself in recent years by offering calling via computers, either free or for a small fee. Backed by its very wealthy parent eBay Inc., Skype is trying to reach new clients, including businesses.

"This could not come at a worse time for Skype," said Kevin Restivo, an analyst at telecom consultancy SeaBoard Group in Toronto, referring to its expansion plans.

"If Skype or any other VoIP [voice over Internet protocol] provider is trying to convince people outside the early adopter range that they should pay for these services, an outage is not the way to go," he said.

A Skype spokesman declined to comment on whether its reputation would suffer.

Skype is part of a new wave of companies that are shaking up the telecom industry as never before. VoIP technology lets them send voice signals over data networks like the Internet, cutting the cost of calls.

The Skypes of this world are taking on giants who have controlled the phone market since calls were first made more than 100 years ago. The established phone carriers like to say they have "five nines" reliability, meaning their system is up and running 99.999 per cent of the time.

In contrast, the new guys still have some issues to sort out, whether it's the network or a business plan. Skype's software headache comes just a short time after SunRocket, another upstart Internet phone service provider, discontinued operations.

"VoIP has grown very quickly," said David Lemelin, a senior analyst at Arizona-based market research firm In-Stat. "There are still issues to be addressed over the long term," he said, but added that VoIP is "certainly the direction the world is moving."

Still, such outages could force consumers to consider other alternatives, observers believe. Skype is based on peer-to-peer technology, which leverages the processing power from users' computers. Other firms, like cable operators, send calls over their own private networks.



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