tag:theconversation.com,2011:/au/topics/telephony-89/articlesTelephony – The Conversation2012-07-12T04:16:42Ztag:theconversation.com,2011:article/81322012-07-12T04:16:42Z2012-07-12T04:16:42ZVerizon Wireless vs Telstra: the great mobile rip-off continues<figure><img src="https://images.theconversation.com/files/12861/original/7583585z-1342061013.jpg?ixlib=rb-1.1.0&rect=42%2C75%2C938%2C524&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Will ACMA's new code of practice be enough to give Australian telcos a wake-up call?</span> <span class="attribution"><span class="source">sachman75</span></span></figcaption></figure><p>Does the recent announcement by the <a href="http://www.acma.gov.au/WEB/HOMEPAGE/PC=HOME">Australian Communications and Media Authority</a> (ACMA) of a new <a href="http://www.commsalliance.com.au/?a=2912">code of practice</a> to prevent <a href="http://www.smh.com.au/technology/technology-news/crackdown-on-telcos-will-ban-misleading-ads-and-bill-shock-20110601-1ffi7.html">bill shock</a> for “long-suffering telco customers”, and improve product marketing practices, bring Australia up to par with its international cousins?</p>
<p>In a word: no.</p>
<p>Bill shock, as the name suggests, is the reaction customers have to unexpected charges on their mobile phone bills. A <a href="http://www.acma.gov.au/WEB/STANDARD..PC/pc=PC_312222">public enquiry</a> held by ACMA, with the final report released in September 2011, found that telecommunication companies write off up to A$113m annually in bad debts related to bill shock.</p>
<p>The latest ACMA announcement is a major step forward but the government and ACMA have to act urgently to fix the great Australian mobile rip-off.</p>
<p>The problem of the <a href="https://theconversation.com/are-australian-international-roaming-charges-the-greatest-rip-off-in-history-4340">international roaming charges rip-off</a> is yet to be directly addressed by either.</p>
<p>Have you heard about <a href="http://www.engadget.com/2012/06/12/verizon-share-everything-data-plans-go-live-june-28/">“data share”</a> and why it is being promoted as a major step forward by <a href="http://www.verizonwireless.com/b2c/index.html">Verizon Wireless USA</a>?</p>
<p>No? Read on and learn how Australian telecommunication companies are ripping-off mobile users with excessive data charges and failure to implement more flexible multi-device accounts.</p>
<h2>The ACMA announcement</h2>
<p>After several years of record complaints to the <a href="http://www.tio.com.au/">Telecommunication Industry Ombudsman</a> (TIO) ACMA finally decided to act. </p>
<p>Its 102-page code of practice – <a href="http://www.commsalliance.com.au/?a=2912">Telecommunications Consumer Protection</a> (TCP) – will be enforced from <a href="http://engage.acma.gov.au/reconnecting/fair-call-new-telco-code-to-benefit-consumers/">September 1</a> and phased in over the next two years.</p>
<p>The top 10 “wins” for mobile consumers can be found <a href="http://www.acma.gov.au/webwr/_assets/main/lib410251/TCP_code-Top_ten_consumer_wins.pdf">here</a>. Among its many proposed benefits, customers will:</p>
<ul>
<li><p>be “empowered” to comparison shop</p></li>
<li><p>better understand what they’ve actually signed up for</p></li>
<li><p>receive notifications at 50%, 85% and 100% of call and data usage, meaning there will be “no excuse for unexpected bill shock when they return from overseas holidays”</p></li>
</ul>
<p>The telecommunication industry body <a href="http://www.commsalliance.com.au/">Communications Alliance</a> prepared the code after ACMA indicated it was not going to “roll over” to industry resistance for change.</p>
<p>The ACMA chair Chris Chapman was quoted <a href="http://www.businessday.com.au/business/telco-code-moves-to-end-confuseopoly-20120711-21uzf.html">yesterday</a> as saying:</p>
<blockquote>
<p>My own discussions with the chief executives of the major telcos have convinced me that they get it [the need for a code of practice]. I think they know that in this increasingly technology driven environment […] there is only one outcome for them — that is to change their business practices and to own their customer is a way that is materially rewarding.</p>
</blockquote>
<p>In another article, Teresa Corbin, CEO of the <a href="http://accan.org.au/">Australian Communications Consumer Action Network</a> (ACCAN) was quoted as <a href="http://www.arnnet.com.au/article/430228/acma_register_revised_tcp_code/#closeme">saying</a>:</p>
<blockquote>
<p>[We] are hopeful that its [the new code of practice] adoption will result in clearer advertising, easier comparison of products, better information about contracts and better tools to help consumers avoid bill shock. </p>
</blockquote>
<p>ACCAN is concerned that ACMA needs to be given greater powers of enforcement. Corbin argues:</p>
<blockquote>
<p>The ACCC, for example, has much stronger powers and its issuing of fines has sent a strong message to the telecommunications industry that its advertising cannot be misleading.</p>
</blockquote>
<h2>Data Share</h2>
<p><a href="http://www.verizonwireless.com/b2c/index.html">Verizon Wireless USA</a> has introduced <a href="http://www.engadget.com/2012/06/12/verizon-share-everything-data-plans-go-live-june-28/">“data share”</a> – an initiative under which customers share their plan’s data allowance across multiple mobile devices, including smartphones and tablets.</p>
<p>The Verizon Wireless data-share plans have been described as <a href="http://www.wired.com/gadgetlab/2012/06/verizons-shared-data-plans-arent-cheap-but-they-are-the-future/">expensive for US mobile customers, but a sign of the future</a>, as American telecommunication companies try to wean customers off unlimited data plans in the move to <a href="https://theconversation.com/you-me-and-4g-the-future-is-in-our-hands-884">4G networks</a>.</p>
<p>Let’s compare Telstra’s current offering with the Verizon Wireless data share plans – bearing in mind <a href="http://www.telstra.com.au/mobile-phones/">Telstra Mobile</a> leaves the Australian competition in its wake for cost, coverage and network quality. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/12841/original/zht799b4-1342017074.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/12841/original/zht799b4-1342017074.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/12841/original/zht799b4-1342017074.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=299&fit=crop&dpr=1 600w, https://images.theconversation.com/files/12841/original/zht799b4-1342017074.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=299&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/12841/original/zht799b4-1342017074.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=299&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/12841/original/zht799b4-1342017074.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=375&fit=crop&dpr=1 754w, https://images.theconversation.com/files/12841/original/zht799b4-1342017074.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=375&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/12841/original/zht799b4-1342017074.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=375&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Telstra plans.</span>
<span class="attribution"><span class="source">Onlineshop.telstra.com.au</span></span>
</figcaption>
</figure>
<p>The current Telstra unlimited talk/MMS, text, with 3GB data plan costs A$100 per month. For three devices on the Telstra network, the cost is threfore A$300 a month, with 9GB of data – 3GB per device, that cannot be shared.</p>
<p>The Verizon Wireless unlimited talk, text and share data plan with 4GB data will cost US$40 (A$40) a month for a smartphone and US$70 (A$70) a month for 4GB of shared data.</p>
<p>For a Verizon Wireless account with three devices (two smartphones and one basic phone) sharing a monthly allowance of unlimited talk, text and 4GB of data would cost US$180 (A$180) a month (excluding taxes and surcharges).</p>
<p>To get a comparison we need to add 5GB of data to the Verizon Wireless plan. Verizon Wireless charges for extra data at a rate of US$10 (A$10) a month for 2GB. For an additional 6GB of shared data a Verizon Wireless customer would pay US$30 (A$10) a month.</p>
<p>So the total cost to the Telstra customer is A$300 per month for three devices and 9GB of data that cannot be shared across devices; the total cost for the Verizon Wireless customer is US$210 (A$210) for three devices and 10GB of data that can be shared across the devices.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/12842/original/hsrz3fw9-1342017137.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/12842/original/hsrz3fw9-1342017137.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/12842/original/hsrz3fw9-1342017137.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=502&fit=crop&dpr=1 600w, https://images.theconversation.com/files/12842/original/hsrz3fw9-1342017137.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=502&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/12842/original/hsrz3fw9-1342017137.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=502&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/12842/original/hsrz3fw9-1342017137.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=631&fit=crop&dpr=1 754w, https://images.theconversation.com/files/12842/original/hsrz3fw9-1342017137.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=631&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/12842/original/hsrz3fw9-1342017137.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=631&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Verizon plans.</span>
<span class="attribution"><span class="source">www.verizonwireless.com</span></span>
</figcaption>
</figure>
<h2>Use or lose</h2>
<p>One of the most frustrating aspects of mobile devices is paying for data that’s not used one month and then paying an exorbitant amount for going over the plan allowance the next month.</p>
<p>The Telstra website provides the <a href="http://www.telstra.com.au/mobile-phones/data-packs/">following advice</a></p>
<blockquote>
<p>If you use more than this [your agreed] amount each month you pay for that extra browsing at a reduced Pay As You Go (PAYG) rate – so you get more for your money.</p>
</blockquote>
<p>Sounds great.</p>
<p>Yet the Telstra additional usage charges are described as A$0.10 per MB used, which means A$100 per GB used. To put that in context, a standard ten-minute YouTube video is about 25MB in size, so would cost the customer A$2.50.</p>
<p>What a rip-off!</p>
<p>The old arguments in defence of high data charges in Australia cannot be justified. Telecommunication companies in the US and Australia have mature 3G networks and have commenced rolling out 4G (LTE) networks targeting areas of high population density initially.</p>
<p>Technology costs have continued to fall. <a href="http://en.wikipedia.org/wiki/Backhaul_(telecommunications)">Backhaul</a>, core and <a href="http://forums.whirlpool.net.au/archive/99517">international bandwidth costs</a> have continued to fall and are now similar to costs in the US and Europe. </p>
<p>Verizon Wireless’s additional usage charges are described as US$15 (A$15) per 1GB of data whenever customers go over their plan allowance.</p>
<p>A Telstra customer with three devices will pay A$85 (US$85) per month more than a Verizon Wireless customer for a similar plan – and for a 1GB data overage, a Telstra customer will be charged A$85 (US$85) more than a Verizon Wireless customer.</p>
<p>Add to this injury the advantages of data share enjoyed by Verizon Wireless customers.</p>
<p>The Verizon Wireless customer will be able to share data use across their multiple devices; by doing so they will be better able to manage data use and potentially reduce the plan cost by moving to a lower shared-data plan.</p>
<p>For Australian families shared data plans are a must. It’s time for the government to act and force telecommunication companies to introduce shared data plans immediately.</p>
<p><strong>Further reading:</strong> <br>
<a href="https://theconversation.com/are-australian-international-roaming-charges-the-greatest-rip-off-in-history-4340">Are Australian international roaming charges the greatest rip-off in history?</a></p><img src="https://counter.theconversation.com/content/8132/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mark A Gregory does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Does the recent announcement by the Australian Communications and Media Authority (ACMA) of a new code of practice to prevent bill shock for “long-suffering telco customers”, and improve product marketing…Mark A Gregory, Senior Lecturer in Electrical and Computer Engineering, RMIT UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/72472012-05-25T02:29:00Z2012-05-25T02:29:00ZPhone cloning and Craig Thomson – how plausible are his claims?<figure><img src="https://images.theconversation.com/files/11044/original/2wf4fbyy-1337904672.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">"Cloning" suggests more than one version of the same thing – but is that really what's happening?</span> <span class="attribution"><span class="source">Arty Smokes (deaf mute)</span></span></figcaption></figure><p>How plausible is <a href="http://www.smh.com.au/opinion/political-news/craig-thomsons-full-address-to-parliament-20120521-1z0vj.html">the claim</a>, by independent MP Craig Thomson, that union rivals may have “cloned” his phone? On Monday, he told Parliament his phone could have been cloned as part of an elaborate conspiracy to implicate him in the use of prostitutes.</p>
<p>Opinion seems divided as to how easy it is to clone a mobile phone. Some say it’s a straightforward matter, others that it’s the province of <a href="http://www.theaustralian.com.au/national-affairs/only-top-spies-into-phone-cloning/story-fn59niix-1226362893537">super-spies</a> only. </p>
<p>Of course the easiest way to prove that it was straightforward would be to actually do it, but it’s not quite that simple. </p>
<p>Not all mobile phones are the same. The ease with which they can be cloned depends on a number of things: access to the phone, the type of network and the type of phone. It also depends on what is meant by “cloning”. </p>
<p>If we mean building an exact replica of the phone, that’s clearly a substantial challenge. But if it just means constructing a phone so that embarrassing calls made on the cloned phone appear on the bill of the other phone, that’s a quite different matter. </p>
<p>Let’s use the second definition.</p>
<p>When the calls in question were made in 2005, there were two main cellular network technologies operating in Australia - <a href="http://en.wikipedia.org/wiki/Code_division_multiple_access">CDMA</a> and <a href="http://en.wikipedia.org/wiki/GSM">GSM</a>. The CDMA system was used mainly in rural areas and was shut down in 2008, whereas GSM was and still is, in use across the country. </p>
<p>By all accounts, <a href="http://www.ssddfj.org/papers/SSDDFJ_V3_1_Murphy.pdf">cloning a CDMA handset</a> is not difficult. It does, however, require a couple of things:</p>
<ul>
<li>access to the phone in question</li>
<li>that either the PIN of the phone is known or is not set. </li>
</ul>
<p>Assuming the person or persons carrying out the cloning had access to the phone then the next step is to obtain the phone’s <a href="http://www.mobiledia.com/glossary/95.html">Electronic Serial Number</a> (ESN). In CDMA networks the ESN is used to link the phone to a particular account. </p>
<p>For popular models of handsets, the ESN is surprisingly easy to obtain from the phone itself. If the phone is not protected by a PIN, obtaining the ESN can be obtained with only a few keystrokes. </p>
<p>After obtaining the ESN, the next step is to purchase another phone and modify its ESN to be that of the original phone. Calls now made from the second phone will have the same ESN as the first phone and will appear on the bill of the first phone. So, if Mr Thomson’s handset was a CDMA one then his story is quite plausible. </p>
<p>If his phone was a GSM handset the story is much more complicated. How old the handset was becomes an important issue. Unlike CDMA systems, GSM phones use a <a href="http://en.wikipedia.org/wiki/Subscriber_identity_module">Subscriber Identity Module</a> (SIM) card to link a handset to an account. </p>
<p>Cloning a handset in the sense we’re using the term boils down to cloning the SIM card – and that’s not straightforward. The SIM card is protected by a secret key. But there are some weaknesses in one of the algorithms used in the handset known as <a href="http://www.suedmeyer.net/inhalte/pdf/comp128_thesis.pdf">COMP128</a>. </p>
<p>There are two versions of COMP128. Version 1 has <a href="http://www.isaac.cs.berkeley.edu/isaac/gsm-faq.html">been compromised</a>. Where the SIM card uses version 1, it is possible to <a href="http://www.vavolo.com/productdetails.asp,mode,1,productid,2400,,.htm">purchase devices</a> that clone the SIM card. </p>
<p>Whether they were available back in 2005 (the period in question in the Craig Thomson story) is a question I don’t have an answer to. But, provided the SIM card was using version 1 of COMP128, it is possible that a copy of the SIM card could be made and then placed in another phone and calls from that phone appeared on the bill for the other phone. </p>
<p>But there are other issues. Some phone companies do not allow SIM cards to be swapped from one phone to another. Each GSM handset has several identifiers apart from the phone number. </p>
<p>There is an identifier associated with the SIM card (the <a href="http://learntelecom.com/telephony/gsm/international-mobile-subscriber-identity-imsi">International Mobile Subscriber Identity</a> or IMSI) which links the handset to the account, and an identifier associated with the handset itself (the <a href="http://www.webopedia.com/term/i/imei.html">International Mobile Equipment Identity</a> or IMEI). </p>
<p>The IMEI is burnt into the handset at the time of manufacture. Both these identifiers are transmitted to the network when a call is made. Carriers that prevent SIM card swapping keep a record of the IMSI and its associated IMEI. </p>
<p>If the IMEI is different to what’s recorded, the SIM card has been swapped to another handset and the network will reject connection attempts. So we have yet another question: did Mr Thomson’s carrier prevent SIM card swapping?</p>
<p>Even if it did, that’s still not the end of the story. The carrier prevents SIM swapping by linking IMSI and IMEI. If the IMEI can be changed then the restriction on SIM card swapping could be avoided …</p>
<p>I think that’s probably a good place to stop. Maybe falsifying an IMEI is not super-spy territory, but we are getting there.</p>
<p>Whether or not it would be easy to clone Mr Thomson’s phone depends on many factors. Whether it was CDMA or GSM, whether or not it was a well-known brand; if it was GSM, how old it was; whether the carrier prevented SIM swapping; how much access the person or persons allegedly doing the cloning had to the phone – and so it continues. </p>
<p>In a nutshell, unless more information is forthcoming, it’s difficult to assess how plausible Mr Thomson’s claims are.</p><img src="https://counter.theconversation.com/content/7247/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Philip Branch does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>How plausible is the claim, by independent MP Craig Thomson, that union rivals may have “cloned” his phone? On Monday, he told Parliament his phone could have been cloned as part of an elaborate conspiracy…Philip Branch, Senior Lecturer in Telecommunications, Swinburne University of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/12152011-05-11T04:56:15Z2011-05-11T04:56:15ZSkype and Microsoft: a deal worth ringing home about?<figure><img src="https://images.theconversation.com/files/1030/original/aapone-20110511000317295437-usa_microsoft_purchases_skype-original.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Microsoft's US$8.5 billion purchase: investment folly, or money well spent?</span> <span class="attribution"><span class="source">Lou Dematteis/EPA</span></span></figcaption></figure><p>So, <a href="http://www.microsoft.com/Presspass/press/2011/may11/05-10CorpNewsPR.mspx">Microsoft has announced</a> it will buy Skype in a US$8.5 billion move that has left the technology and business worlds puzzled.</p>
<p>Owners of Microsoft shares might be most puzzled of all, maybe even tearing their hair out over a deal that, at first sight, seems to have significantly disadvantaged the software behemoth, both <a href="http://www.smartcompany.com.au/information-technology/20110511-will-microsoft-make-a-return-from-its-us8-5-billion-skype-acquisition.html">financially</a> and technologically.</p>
<p>Why has Microsoft taken the risk?</p>
<p>In short, if this deal works out, Microsoft may have bought itself back into a game it was losing against internet upstarts such as Facebook and Google.</p>
<p>So, what makes Skype so valuable? </p>
<p>Skype is a service that provides <a href="http://en.wikipedia.org/wiki/Voice_over_IP">VoIP (Voice over Internet Protocol)</a> in which calls are transmitted as data packets over internet connections.</p>
<p>This technology operates in contrast to conventional phone technology, which relies on the creation of virtual circuits between the two ends of the call. VoIP allows the unification of telephone services with the internet and removes the need for a dedicated telephone line. </p>
<p>The popularity of VoIP and Skype is the primary reason for the increasing popularity of Naked DSL plans (i.e. internet plans that leave out the cost of the phone line).</p>
<p>There are many pure VoIP providers (such as <a href="http://www.vonage.com/">Vonage</a>) that provide telephone service for business functions (such as call centres) but Skype is not a pure VoIP implementation. </p>
<h2>VoIP and more</h2>
<p>Skype has its roots in the failed peer-to-peer (P2P) startup, <a href="http://en.wikipedia.org/wiki/Kazaa">Kazaa Technologies</a>, that was brought to ground by <a href="http://en.wikisource.org/wiki/MGM_Studios,_Inc._v._Grokster,_Ltd.">lawsuits alleging that the platform played a role in the piracy of copyrighted films</a>.</p>
<p><a href="http://en.wikipedia.org/wiki/Peer-to-peer">Peer-to-peer (P2P) technology</a> involves dynamic connections between machines on the internet, connections that are used to share functions such as processing power or <a href="http://www.f5.com/pdf/white-papers/rateshaping-wp.pdf">bandwidth</a>.</p>
<p>Skype uses <a href="http://en.wikipedia.org/wiki/Skype_protocol">proprietary P2P protocols</a> to perform computationally-intensive functions – such as routing calls – and uses bandwidth of connected computers to provide traffic intensive services, such as video calls. </p>
<p>It has also developed a suite of technologies to work around obstacles on the internet such as firewalls. This means that Skype provides better call quality and more features than any of its competitors.</p>
<h2>Cloud wars</h2>
<p>Skype’s many features – not to mention a <a href="http://www.newscientist.com/blogs/onepercent/2011/05/skype-buyout-lets-microsoft-ex.html">bevy of patents</a> – is likely to make it hard for Google or Facebook to compete in the VoIP market.</p>
<p>By integrating Skype’s P2P technologies into Microsoft products such as <a href="http://www.officelive.com/en-us/">Office Live</a> and <a href="http://www.microsoft.com/en-us/lync/communicator.aspx">Lync Communicator</a>, the software giant can markedly improve its performance against rival offerings (Google Docs, for example).</p>
<p>This is a key advantage, particularly considering that the tech <em>trend du jour</em> is cloud computing, wherein users interact with software applications hosted on remote data centers. </p>
<p>But there are many challenges for Microsoft to overcome before it can realise the benefits of this purchase.</p>
<p>Integration of two diverse technologies is one. The other is the fate of Skype users running non-Microsoft operating systems (Mac and Linux, for example).</p>
<p>While Microsoft has pledged to support all operating systems in this new venture only time will tell if this is the case.</p>
<p>Whether the purchase of Skype is good move or investment folly remains to be seen.</p>
<p><strong>Related coverage</strong></p>
<ul>
<li><a href="https://theconversation.com/a-big-call-what-microsoft-wants-from-skype-1211">A big call: what Microsoft wants from Skype</a></li>
</ul><img src="https://counter.theconversation.com/content/1215/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Srikumar Venugopal does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>So, Microsoft has announced it will buy Skype in a US$8.5 billion move that has left the technology and business worlds puzzled. Owners of Microsoft shares might be most puzzled of all, maybe even tearing…Srikumar Venugopal, PhD; Lecturer in Computer Science and Engineering, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/12112011-05-11T04:54:51Z2011-05-11T04:54:51ZA big call: what Microsoft wants from Skype<figure><img src="https://images.theconversation.com/files/1028/original/aapone-20110511000317301661-us-it-internet-telecom-microsoft-original.jpg?ixlib=rb-1.1.0&rect=119%2C44%2C3022%2C2186&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Microsoft CEO Steve Ballmer, left, has big plans for Skype.</span> <span class="attribution"><span class="source">Kimihiro Hoshino/AFP</span></span></figcaption></figure><p>Microsoft’s US$8.5 billion Skype acquisition, <a href="http://www.microsoft.com/Presspass/press/2011/may11/05-10CorpNewsPR.mspx">announced yesterday</a>, gives the US software developer a golden opportunity to expand its business via the internet, including accessing and leveraging the rapidly growing social media market. </p>
<p>This makes sense, given the primary motivation for most acquisitions is they provide the fastest route to growing revenues.</p>
<p>Despite Microsoft’s previous, less-than-successful internet forays things are looking promising. Indeed, the Skype acquisition appears to make a great deal of strategic sense on a number of fronts. </p>
<p>As one of the largest acquisitions in corporate history, the deal is not without risks. But the Skype deal gives Microsoft chief executive Steve Ballmer and his team an opportunity to “change the rules of the game” in their favour. </p>
<h2>A competitive context </h2>
<p>Microsoft is operating in a globally competitive and rapidly evolving high-tech industry. Success and failure is played out in an environment where there are no effective barriers to hide (IP) behind. </p>
<p>Its key value drivers (success factors) are constituted by multiple layers of speed of innovation, the ability to integrate, and ease of access. This ease of access equates to a need for seamless communication, anywhere any time. </p>
<p>The integration of Skype’s internet telephony and video technology with Microsoft’s Windows platforms (including Outlook and Xbox Live services) will give consumers new, more innovative, effective and flexible means to communicate and transfer information and data. </p>
<h2>Multiple benefits</h2>
<p>The fact Skype also runs on Macs, Linux, iPhone and Android-based devices will allow Steve Ballmer and his team to design a valuable offering that represents a better deal for consumers. </p>
<p>Of course, for Microsoft’s competitors, the news is not so welcome. </p>
<p>The integration of Microsoft and Skype’s technological capabilities and brand recognition will help Microsoft grow its market share in its traditional software markets. </p>
<p>But, more importantly, it will present new opportunities in those market segments (iPhone and game markets) dominated by Apple. </p>
<p>Microsoft’s strategic logic is impeccable on another front: at very least it will impede and or slow Google’s quest to dominate the communications market. </p>
<p>That said, the real challenge lies in the execution of these ambitions. </p>
<p>The merger will test both Microsoft’s and Skype’s management and staff. Are the operating cultures at both firms compatible? </p>
<p>One real risk is that merger tensions could become a major barrier to the potential evolution and development of the technologies and synergies. </p>
<p>Fortunately, all indications are that given the insights gained by Microsoft from previous experiences this is not likely to occur.</p>
<p><strong>Related coverage</strong></p>
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<li><a href="https://theconversation.com/skype-and-microsoft-a-deal-worth-ringing-home-about-1215">Skype and Microsoft: a deal worth ringing home about?</a></li>
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<p class="fine-print"><em><span>Antoine Hermens does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Microsoft’s US$8.5 billion Skype acquisition, announced yesterday, gives the US software developer a golden opportunity to expand its business via the internet, including accessing and leveraging the rapidly…Antoine Hermens, Doctor; Director Global EMBA, School of Management, University of Technology SydneyLicensed as Creative Commons – attribution, no derivatives.