I recently installed BT Communicator, which is British Telecom’s answer to Skype.  Like Skype it allows free calls (PC to PC) and offers the capability to break out onto the PSTN to call anyone anywhere, for a fee.  Being naturally curious, I fired up Wireshark and captured some of the activity on the line, and I was delighted to discover that it’s using our old friends SIP and RTP to signal and carry the calls.  In contrast, if you capture Skype traffic, you can’t figure out what’s happening unless you put an awful lot of research into it.

Are BT offering unique value with their service?  I think so: firstly the billing backs into the same BT billing system, and ends up on my phone bill, where Skype operate a pay-as-you-go system that needs charging via card etc.  One less thing to worry about with BT.  Secondly, unlike Skype, BT are embracing open standards, but still with an eye on security (the service uses Proxy Authentication to secure the calls, but no crypto yet).  Skype consider their softphone to be an important part of their service offering, and won’t open up the protocol to other clients.  As I see it, most of the Skype value is in the sheer number of customers that use the service, and I imagine Ebay also saw it this way, but this is a topic for another day.  BT, on the other hand, are looking further out to the open standards world, where it will be an advantage to be SIP-compatible.  Perhaps this is already architected to slot right in to their IMS backbone, 21CN.  One final advantage is that there are actually people out there that don’t use the Internet much, and don’t know about Skype.  So BT are actually using their marketing money to tell these people that they can call their friends for free using Communicator.   Of course they are cannibalizing their own call revenue, but perhaps they see the bigger picture, that like Skype, this can be used to pull through all kinds of other revenue generating services.

I like this approach to business better than that of companies like Shanghai Telecom and China Telecom, who reportedly have bought software technology to detect and block Skype traffic.  Presumably, they will also be blocking SIP, since this is technically much less difficult.  The thinking behind this is that if people aren’t calling with Skype, then they have to pick up the legacy phone.  This kind of thinking, “I don’t make any money out of this; can I block it?” is just the kind of blinkered approach that leads to telco lobbying in the net neutrality debate in the US.  Companies like AT&T would like to get paid twice, once by the Skypes and Googles, and then again by their telco customers.  Of course we’d all like to get paid twice, but most of us don’t have the political clout to make it happen. 

BT have not always been the most dynamic company, but I imagine that if they can learn something about business from Skype, then all large telcos stand a chance.  So come on guys, stop wringing your hands and worrying about becoming the bitpipe, and get out there and innovate.