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The Honolulu Advertiser
Posted on: Saturday, August 25, 2007

Skype outage just a blip for Net phones

By Matt Moore
Associated Press Business Writer

FRANKFURT, Germany — When the Internet phone company Skype went offline for nearly two days last week, Tim Legrand was frustrated and inconvenienced. But he has no plans to switch back to a traditional telephone line.

The Birmingham, England, graduate student, who ditched his old phone service a year ago, says Skype's low cost and flexibility outweigh the headaches caused by the outage.

He's not alone. Although millions of users were angry, analysts say the outage is unlikely to cause customers to hang up on the service.

If anything, the reaction may be a sign that Internet telephony — or Voice over Internet Protocol — is coming of age, said Richard Levick, chief executive of Levick Strategic Communications, which provides crisis guidance for companies.

"The attention paid to these outages shows that these technologies have been accepted," he said. "As such, this outage will no more drive potential users away than a telephone outage in 1955 would have driven people back to using carrier pigeons."

Skype, which was bought in 2005 by online auctioneer eBay Inc. for $2.1 billion, has a loyal following, with about 220 million total users worldwide. It has proven popular with everyone from stay-at-home parents and students to executives seeking to trim costs for long-distance phone calls.

Users can talk with other Skype users on their PCs for free. For pennies per minute, they can make calls to or receive them from cell phones and regular phones.

Skype's versatility, Legrand said, "meant that I could safely give up paying for a land line." He uses his mobile phone for about 10 minutes a day but spends "an hour a day talking on Skype" to his family and girlfriend.

"Although at the time it was incredibly inconvenient to suddenly lose my connection, I'm not thinking about using a different Internet telephone," said Legrand, a Skype user since 1995.

Skype blamed the nearly 48-hour outage, which started Aug. 16, on a software bug that was exacerbated by PC users restarting their machines after installing a routine Windows patch from Microsoft Corp.

For other users, outrage wasn't focused on the outage itself but on Skype's response.

It took more than a day for Skype to dispel speculation that the problem was caused by hackers, said Stefan Topfer, chief executive of WinWeb, a London-based provider of software for small businesses that includes Skype in its bundles.

Several e-mails he sent to the company during the outage got no response while his own customers were asking him whether it was safe to use the service.

In its official blog, Skype said the bug "has been squashed." Neither the company nor its parent would make a representative available to comment on how it handled the crisis, though Skype did offer a week of free service to its paying customers.

In the United States, the number of Internet phone subscribers is estimated at slightly more than 14 million and growing, according to the research firm TeleGeography.

About 6.5 million consumer VoIP lines were in place in Europe at the beginning of 2006 — a figure that TeleGeography said rose to 22 million by mid-2007.