Skype Free But Not Practical — Yet

Skype, a way of making voice calls using the Internet instead of telephones, is currently free. It is also easy to use, requiring only the purchase of a $15 (USD) headset.

But Skype is still a ways from being practical for small businesses.

Skype, a Scandinavian company, is by the same people who developed KaZaA, the music filesharing application. Skype is a “peer to peer” voice application. All you do is go to the Skype website, download the Skype software to your Windows 2000 or XP computer, plug in your headset, and call up another person.

The catch is that right now the other person also has to have the Skype software. And, since there is no Skype phone book or directory assistance, it is up to you to know how to reach the other person.

Skype claims to be different from other Voice over Internet Protocol (VoIP) applications. In addition to being simpler to use, the website says that Skype works behind most firewalls whereas most VoIP solutions do not work behind broadband connections due to firewalls. Early reports rave about Skype’s clear reception and ease of use.

One of Skype’s founders, Niklas Zennstrom, announced today on CNBC TV’s Closing Bell that Skype is entering into agreements with major telecommunications providers to enable Skype users to communicate with regular telephone customers. No word was given on when that service would become widely available. Until that happens, Skype’s usefulness for business purposes is limited.

The telecommunications companies are worried about Skype and other VoIP. They are leading the charge in the United States to convince state legislators and the Federal Communications Commission to subject VoIP providers to licensing and tax requirements the same as telephone companies.

“Skype Me” Button that tells others you are a Skype user

Although it looks like VoIP solutions will eventually overtake and replace standard telephone service, Skype and other VoIP solutions are still not ready for prime time at most small businesses — yet. Small businesses tend to be technologically risk-averse. Mostly they adopt solutions after they become mainstream, i.e., after prices come down and the solutions mature to the point they are bullet-proof. Small businesses can’t afford solutions that might fail and turn out to be nothing more than expensive experiments, or which require special technical expertise to implement. So for the time being, the average small business is likely to stick with tried-and-true communications such as land-line phones and cell phones.

Anita Campbell Anita Campbell is the Founder, CEO and Publisher of Small Business Trends and has been following trends in small businesses since 2003. She is the owner of BizSugar, a social media site for small businesses.