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Bell Bottom Blues - eBay Rising

eBay's ambitious grab at Skype heralds an apogee in telecom history, the point where a blue-chip public company has finally endorsed the new generation of Internet communication. This radical, Rule-Breaking shift has been slowly developing under the surface for years. Until recently, all of the giant incumbent phone companies had fought this macro trend. They lost. Now, companies such as SBC (NYSE: SBC) and Verizon (NYSE: VZ) have begun abandoning their legacy circuit-switched voice networks and branching out into flashier wireless and packet-switched data offerings in a frantic effort to stay relevant (and alive). In fifty years, we'll likely look back at this era as the evaporation of the Bell System and the birth of the broadband age.

The fear that eBay's purchase of Skype represents an unproductive and distracting foray into telecom, wholly unrelated to eBay's core Internet auction business, is a misplaced concern. Traditional telecom companies are a dying breed, and eBay isn't buying into one of them. Instead, it wants to be a new-fangled entity that allows people to communicate, connect, and transact business easily worldwide - a competency it's willing to pay billions for today.

eBay Today, eBell Tomorrow? This is perhaps the best analysis I've read on why eBay buying Skype is a big deal, maybe the biggest deal we've seen in Telecom in a long time. $2.6 Billion is, after all, not chicken feed. The rest of this blog is a vision exercise.

If you haven't tried Skype yet, I'd urge you to do so, just to get a better grip on the buzz surrounding this deal. First, you have to have a broadband connection for this to work. If your laptop lacks a built-in microphone and speaker, you'll want to buy a headset with a microphone attached for around $10. Othewise, that's all you need to turn your laptop into a free telephone. You download the free Skype software, and get a friend to do the same. Now you and your friend can talk to your hearts content over the Internet, NO MATTER WHERE THE TWO OF YOU ARE. And most of the time, its crystal clear wthout lags and skips, like with early VOIP. Move over Pin Drop Network.

And Good Bye Long Distance, Good Bye area codes, Good Bye dial tones and Good Bye monthly telephone bills (and Good Bye to all those additioinal charges and fees that are so many hidden taxes). Good Bye Moon. Voice is an IP application that will be subsidized by advertising and other services. This vision requires us to junk a lot of what we have known as standards our whole lives - telecom dogma - and it's hard work.

But it's a beautiful world, although it takes some time to get used to the idea. Who knows how long this fantasy will last, but it sure works for me. In the end, what I really like is that a broadband network is needed for this service to work; without broadband, you can't get to all these new neat applications. You're on the outside of the restaurant looking in at all this nice food, like that scene in Doctor Zhivago.... we're still early in this transition, but this is the kind of social pressure that will promote municipal wireless networks. The infrastructure is Step One. Let's get busy.

Posted on September 30, 2005 at 10:21 PM

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