Skype's Prices Are Creeping Up

Posted by: Olga Kharif on January 18, 2007

I’ve written about the creep up of VoIP calling rates before. But here’s another piece of evidence that this is happening: On Jan. 18, Skype unveiled a slew of new calling plans. Called Skype Pro, these plans, which have just debuted in Europe and will be rolled out worldwide this year, allow users to make unlimited calls to domestic phones for a fixed monthly charge. People who sign up won’t have to pay per-minute fees for SkypeOut, and will also enjoy lower international calling fees (yup, Skype Pro users will still have to pay international calling rates, in addition to purchasing the plan).

What I find difficult to believe is that a lot of people will want to take advantage of this. Today, an average Skype user only spends a few bucks a month on SkypeOut, if that. Would users want to pay the expected $6-7 monthly charge? And, on top of that, pay for international calling and for connection fees? Honestly, I think it would be cheaper for people to just buy traditional calling cards.

By the by, Skype is not alone in revving up its charges. A few days ago, Verizon increased rates it charges users of MSN Live Messenger in Mexico, for instance. What’s happening is, many VoIP service providers are raising their prices, big time. Sure, they need to find a way to make money. But I think raising prices is a big mistake. In the past, users switched to VoIP because it was the cheapest calling option around. When it’s no longer that, customers might no longer hurry to abandon their traditional telecom services providers for upstarts.

Reader Comments

swissfondue

January 19, 2007 5:06 AM

Most traditional phone companies have abandoned "connection" charges. People perceive connection charges as a phone company usage tax that doesn't benefit the subscriber in any way.

This is the wrong direction for Skype. It makes costs less transparent. Soon if I call someone on a landline for 1 minute, I will need to add the connection cost to the minute rate to find out what the total cost will be.

My cable company provides phone services. I can call free every evening and on weekend to landlines within Switzerland. Skype is much more expensive.

My mobile provider (with certain restrictions such as time of day and who I am calling) charges me CHF 0.70 per hour per call. Skype can not compete at these rates.

guilli

January 20, 2007 5:08 AM

I'm disgusted with Skype new prices, but still I have to disagree with swissfondue. I'm living in Switzerland too and I know what you're talking about. For the free calls to landlines you still pay 20-25 swiss franc a month as abonament for the line which I find totally ridiculous! For 25 swiss francs a month I can still call a lot with Skype even with the connectiocn fee to many international ountries. Depending how much you call Skype can be still cheaper. Moreover, I think Cablecom is super disgusting as well. They use the same cable for tv, internet and the phone and it costs so much! 3 abonaments!!

norman

January 26, 2007 7:06 AM

Having just rifled off an email to skype advising them of my own thoughts regarding their ability to quadruple a minimum call cost in the UK for a less than one minute call without adequately advising the consumer, I wonder if they realise the kind of reputational damage this may cause to their business. In many instances with all the home telephony and free mobile minutes etc, packages around it wil be easier and cheaper to call through traditional means.

A bad move for skype, I will certainly think twice before using and recommending their services.

norman nesbitt

Eric Itzkowitz

April 9, 2008 6:25 PM

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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