Will the Internet Kill the Phone Business?

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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

Case Details:


Case Code : MISA001 For delivery in electronic format: Rs. 200;
For delivery through courier (within India): Rs. 200 + Rs. 25 for Shipping & Handling Charges


Case Length : 8 Pages
Period : 2005
Pub Date : 2005
Teaching Note : Not Available
Organization : -
Industry : Telecom and Broadband
Countries : Global


Voice over Internet Protocol (VoIP), is threatening the business models of incumbent telephone service providers. VoIP allows people to make free calls to other Skype users over the Internet, and very cheap calls to traditional telephones. The threat of VoIP looks more real than ever, following eBay's acquisition of VoIP's leading proponent, Skype for US$2.6 billion. eBay plans to use Skype's technology to make it easier for buyers and sellers to communicate, and to offer new "click to call" advertisements. Although US$2.6 billion seems a vast sum to pay for a small company yet to turn a profit, eBay has not been the only company interested in buying Skype.

Microsoft, Yahoo!, News Corporation and Google have all considered the idea. Whatever the merits of the deal, the acquisition of Skype has highlighted the significance of VoIP, and the enormous threat it poses to incumbent telecom operators. Do the rise of Skype and other VoIP services mean the end of the traditional telephone business, established over a century ago? Do the traditional telecom service providers have a chance at all of surviving?


  Page No.
Introduction 1
About VOIP 1
The Making of a Deal 3
The Road Ahead 5
Exhibits 7


Voice over Internet Protocol (VoIP), VoIP services, Skype's technology, eBay, Microsoft, Yahoo!, Acquisition of Skype, Niklas Zennstrom, Janus Friis, Cable operators, Mobile operators, Vodafone

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