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Skype Is Now 40% Of The Entire International Telephone Market

by | 17th, January 2014

THIS is a seriously astonishing little piece of information. Skype now carries enough international phone calls that its own traffic is equal to 40% of the entire international calling market. And there’s an important point here about why economic growth seems to be slowing too. Here’s the basic news in the WSJ:

More importantly, Skype’s traffic was almost 40% the size of the entire conventional international telecom market — that is, for every ten minutes spent making international phone calls on every mobile and landline network in the entire world, four minutes are spent on Skype. The service is gradually eating its industry.

OK, so, great, we’re getting cheap phone calls: or in fact, given that this is only computer to computer calls, we’re getting free phone calls.

But think what this does for the recorded economic growth. OK, maybe it’s only the economics geeks that know this but GDP is in fact the economic activity that gets paid for in the economy. We don’t include the value of Mum’s home made meals for example: because no one is paying for that. And we don’t include in GDP that value of Skype’s free phone calls either. Because they’re not being paid for and GDP only includes things being paid for.

But think this through for a moment. 15 years ago we were paying £1 a minute to call the US (or whatever we were paying) and today we get that for free. So that GDP has gone down: because there’s less activity being paid for. But clearly and obviously we’ve actually all got richer as a result. For we’ve now got free phone calls.

And there’s more and more of the economy that is working this way: the last couple of decades have seen the price of just about everything digital plunge, most of it to free. So, the recorded economy makes it look like we’re poorer, or at least that economic growth has been weaker than it had been before. But at least some of this is because we’re, we the consumers, becoming so much richer as a result of getting all this stuff for free.

And it’s very difficult to describe getting stuff for free as getting poorer…..



Posted: 17th, January 2014 | In: Money, Technology Comment | Follow the Comments on our RSS feed: RSS 2.0 | TrackBack | Permalink