Skype disconnects competitor from its network

DISCONNECTION IS THE ROUTE Skype is taking to bolster its attractiveness to investors as it forces rival voice over IP (VoIP) firm Nimbuzz off its network.

Nimbuzz, told The INQUIRER exclusively that Skype had asked it to "remove all support" for Skype from its VoIP and messaging client from 31 October. The news comes after Nimbuzz announced that it had over 150 million downloads of its software and racked up over 3.65 billion voice minutes through its software.

Now the firm is saying that Skype's decision to disconnect it from the network is due to its "mandate to disconnect with all third party VoIP services ahead of its impending IPO [initial public offering]". Recently Nimbuzz announced its own service that allows its users to call phone numbers, and the firm told The INQUIRER that 50 per cent of the 3.65 billion voice minutes it had registered generated revenue for it.

With those sorts of revenue figures, it is not hard to see why Nimbuzz believes that Skype wants to disconnect one of its major rivals from accessing its network. However, Tobias Kemper, US general manager at Nimbuzz seemed to be both baffled and certain in his reasoning as to why Skype had strong armed Nimbuzz off its network. 

"We tried to comply with Skype policies," Kemper told The INQUIRER, adding, "they could have benefitted by supporting Nimbuzz". The company had integrated Skypeout, the primary source of income for Skype within its client, effectively giving Skype a shop window onto Nimbuzz's 30 million registered users. "Nimbuzz brought Skype onto more operating systems" said Kemper, who thinks the real losers are the users that will be unable to contact those on Skype's network.

Kemper explained that Skype wanted greater control of the quality of service and user experience, something that Nimbuzz was unwilling to do. Kemper claimed that Nimbuzz already used superior audio codecs and that it was not willing to give further control over its network to Skype. 

Nimbuzz's claim that Skype is effectively disconnecting potential competition in order to boost its attractiveness to potential investors is a strong one to make and could potentially have legal consequences. Kemper freely admits that Skype has the largest market share, but that Skype's actions reflect "an old school attitude that doesn't include collaboration".  

Kemper is defiant saying Nimbuzz can "hold its own" and it can comfortably stand alone as a network should it have to. That may sound like hot air, especially given that the company won't have access to what it admits is the largest VoIP network around, but Nimbuzz hasn't been relying on handouts from Skype to make its money. 

Kemper reeled off a list of mobile operators it has cut deals with and it's impressive, both in terms of names and more importantly the regions in which they operate. The list includes Tata Indicom/Virgin Mobile and Aircell in the lucrative Indian subcontinent and Telkomsel in Indonesia. What is not clear is how much weight being able to connect to Skype's network carried in closing those and other deals. Skype is clearly banking on the fact that it was access to its network that helped Nimbuzz clinch those deals.

Given it is pretty clear that Nimbuzz is a competitor to Skype, Kemper seemed to shrug off whether disconnection by Skype was always on the cards. He seems to truly believe that Nimbuzz could have offered Skype another revenue stream. For Skype, a company that has rarely provided usage figures for its network, the news that a competitor is achieving 50 per cent revenue generation on all call minutes through its client must cause it to look back over its shoulders and worry at what exactly is helping Nimbuzz reach such impressive figures.

Earlier this year Skype booted Fring off its network, leading to a public slanging match between the two firms. Nimbuzz, although coming out with some strong claims, is still hoping that Skype will reconsider its decision to give Nimbuzz its marching orders and Kemper is offering the hand of cooperation to Skype and any other messaging network that wishes to work with his firm.

While Nimbuzz somewhat paints itself as the victim of bully-boy tactics, the truth is that its astonishing usage and revenue generation figures make it as a serious competitor for Skype. It also reveals that VoIP firms are actively working with mobile operators to help them generate cash rather than just subverting their traditional revenue streams. 

Whether all this is leading up to Skype making its bow on the Nasdaq or whether this is just the networking version of stiff competition, Skype is taking a very hard line against competitors. Nimbuzz will be hoping that its customers, chiefly mobile operators, won't decide that access to Skype's network and its users is worth more than all the other networks. µ