Disadvantages of commodity telephony

I love Skype. I mean free calls, no up front cost, no obligation? What’s not to like? Skype is the only way I make calls to Europe and make 3-way calls, although I use a regular (phone number-based) VoIP service for calls in “North America.” I even sometimes help support their “freemium” business model.

But today Skype failed me when I most needed it — when I was trying to finalize decisions for the conference minitrack (on IT standards) that I’ve been running for the past 4 years. I needed to confer with my two co-chairs who are in Europe, but all I got was a Skype client that wouldn’t work, and even a website that wouldn’t come up.

Finally, Skype admitted to their problems on their home page:

UPDATED 16 August, 2007 14:02 GMT: Some of you may be having problems logging in to Skype. Our engineering team has determined that it’s a software issue. We expect this to be resolved within 12 to 24 hours. Meanwhile, you can simply leave your Skype client running and as soon as the issue is resolved, you will be logged in. We apologize for the inconvenience.

Reading between the lines, they did a planned maintenance on Wednesday, suggesting that they installed new software yesterday that doesn’t work. I held off posting this waiting for a resolution, but 13 hours after the original posting they are still making excuses

Apologies for the delay, but we can now update you on the Skype sign-on issue. … This problem occurred because of a deficiency in an algorithm within Skype networking software. This controls the interaction between the user’s own Skype client and the rest of the Skype network.

Rest assured that everyone at Skype is working around the clock — from Tallinn to Luxembourg to San Jose — to resume normal service as quickly as possible.

and even more excuses

Everyone at Skype continues to work hard at resolving the current software issue. We are making good progress. We feel that we are on the right track to bring back services to normal.

We thank you for your continued support and are thinking of you every step of the way.

(Updated at 2:15am GMT)

Once upon a time, people in the U.S. paid for telephone service which was probably the most reliable and dependable function of our entire industrial economy. If the power went out, if there was an earthquake or blizzard, the phones would still work. About the only thing it couldn’t handle was the annual flurry of long-distance calls on Mother’s Day.

The disadvantage was that long-distance calls were way overpriced, until 1969 and 1977 when MCI found a way to arbitrage the cross-subsidy to create America’s fastest growing communications company. After that, a railroad subsidiary decided to string fiber optic lines along its right-of-way and SPrint bragged that you could hear a “pin drop.”

Now VoIP is threatening the Baby Bells, because people would rather have unreliable and low-quality service that’s free, than expensive reliable service. Will there be competition that makes “free” service better? Or are we doomed to have mediocre quality in the name of commoditization?

Technorati Tags: commoditization, Skype, VoIP