Taiwan operator blames VOIP for long distance call drop

Taiwan's largest telecommunications company on Thursday blamed VOIP (voice over Internet protocol) for part of a dropoff in long distance revenue last year, a trend companies worldwide face as users turn to Internet services such as Skype for low cost or no cost voice calls.

It's an issue network operators are grappling with around the world, and users should pay attention to the issue. Telephone networks cost hundreds of millions of dollars to build, and companies want to wring every dollar they can to pay for them and grow their businesses. Low-cost or no-cost VOIP calling is a threat to their earnings, and telecom industry complaints could prompt government regulators to step in and offer protection. If that happens, users could miss out on lower cost Internet calling.

"International long distance revenue decreased 4.1 percent due to stiff competition and the impact from VOIP," Chunghwa Telecom Co. Ltd. said in a statement. The state-controlled company formerly held a monopoly in Taiwan before a few new companies entered the long distance fray several years ago.

VOIP is popular in technology-savvy Taiwan, mainly the software made by Skype Technologies SA that allows PC users to make free voice calls to each other over the Internet or low-cost calls to phones. The company teamed up with Taiwanese Internet portal operator PCHome Online Inc. to help distribute the software a few years ago.

As of Thursday, the Web site hosting Skype's VOIP software for PCHome Online, http://skype.pchome.com.tw/, counted 11.34 million downloads. Users may include Chinese speakers living outside Taiwan who read the traditional Chinese characters used in the Taiwanese software, but not likely users from China itself, where a simplified writing system is used.

Chunghwa isn't that worried about VOIP right now, but it is trying to gain a license to further develop its VOIP offerings. Network operators can channel calls through the Internet at lower rates, passing the savings on to users, for example, and are finding other ways to use VOIP as well.

Chunghwa has been offering some service through VOIP for corporations on the island for a few years, said Fufu Shen, a representative for the company. But a license allowing companies to offer services to consumers hasn't come out yet.

"The application process for [VOIP] licenses is open, but nobody has been awarded a license yet," she said, adding that although services such as Skype are a worldwide trend, "free [VOIP] service is not the business model we're looking at."