Users spurn traditional calls for Skype

Users wanting to call home form abroad are increasingly turning to Skype's Internet telephony service to the detriment of international carriers, new data showed.

"Skype is now the largest provider of cross border communications in the world, by far," said Stephan Beckert, analyst at research firm TeleGeography on Tuesday.

Skype's technology allows consumers to make practically free long-distance calls over the Internet on fixed lines. It is mostly used on desktops but Skype has made the move into mobile too and it now comes pre-installed on some cellphones.

According to the firm's data, over the past 25 years, international call volume from telephones have grown at a compounded annual rate of 15 per cent.

In the past two years this growth has however slowed to only 8 per cent, rising from 376 billion minutes in 2008 to an estimated 406 billion minutes last year.

By comparison, Skype's on-net international traffic between two Skype users grew 51 per cent in 2008, and is projected to grow 63 per cent in 2009, to 54 billion minutes.

"The volume of traffic routed via Skype is tremendous," said Beckert.

In general, TeleGeography said, "demand for international voice has been remarkably robust, but it's clearly not recession-proof."

Traffic to Mexico, the world's largest calling destination, declined 4 per cent in 2008 for example, and aggregate traffic to Central America declined 5 per cent, data showed.

Established in 2003 and based in Luxembourg, privately owned Skype has more than 520 million registered customers who use the free Web service for voice, video or text communication.

But despite its size, its revenue is relatively modest - at about $551 million (£338 million) in 2008 - as the company has had a difficult time getting users to pay for its largely free services.

Skype aims to nearly double its annual revenue to $1 billion (£614 million) in two years.