ECONOMY

Web shakes telephony

Internet technology developments constitute a major challenge for the telecommunications sector, with telephone through the Web (Voice over Internet Protocol, or VoIP) threatening the revenues of traditional landline telecom giants, particularly in international calls, according to the annual sector report by the Organization for Economic Cooperation and Development (OECD). The survey suggests that although the sector has now returned to profits after the shock of excessive investments at the end of the previous decade, the future will have even greater competition in store. Telecom service pricing in OECD countries keeps changing with a declining trend for rates, favoring customers. One after another, telecom companies are led to charging a standard rate without counting local calls, while the geographical zones where calls are considered local are constantly expanding. The Skype program Competition with new technologies contributes decisively in price drops both for corporate and domestic users. Skype, for instance, is an Internet telephony service provider that has gained extreme popularity. By downloading a program for free, Web users can speak from their own computer with any other user who has downloaded the same program, with no charges from Skype. Both just pay for using the Internet. Users can also call any number in the world at a relatively low rate and payment is by credit card. Charging actually goes according to the destination of the call, regardless of its origin; this means that a call to Australia, for instance, costs the same whether it is made from Greece, the US or within Australia. Consequently, even if you are in Greece it costs less to call a number in Australia than within Greece. OECD believes charges for a Skype user are about 80 percent lower on average compared to those through the traditional landline telecom companies. The year 2003 was a significant one for landline telephony as, for the first time ever, the number of subscribers went down in OECD countries. The trend continued in 2004 and is still carrying on this year. Mobile telephony companies keep earning market share at the expense of traditional telecom companies. In many countries, including Greece, cellular telephony has more subscribers than the landline one. However, mobile networks, too, will face hard times, according to the OECD, as they have paid huge sums of money for third-generation licenses (3G) but are up against unforeseen competition from new services (such as wireless Internet, or Wi Fi). Yet even television is under threat by broadband Internet connections which allow users to download videos at a speed and quality which, until recently, were impossible.