Skype Affects Fixed Phone Communication Businesses in Georgia


International call operators are claiming that the popularity of Skype and other software applications among Georgians has reduced the use of traditional phone services by approximately 20%.
They are hoping the further development of internet communication will not force their service to withdraw completely. Although Skype states that it is "not a replacement for traditional telephone service", around 20 million people communicate via this programme daily.

Skype allows users to communicate by both voice and more traditional textual IM-instant messaging. Voice chat allows both calling a single user and conference calling. Skype's text chat client allows group chats, emoticons, storing chat history, offline messaging and editing of previous messages. Skype it allows Skype users to receive calls on their computers dialled by regular phone subscribers to a local Skype phone number; local numbers are not available in Georgia yet.

Some businesses are using Skype for internal and external communications. Recently Skype partnered with LG electronics and Panasonic enabling users to have very high quality video chats with HDTV Connectivity.

Sergo Karakozov, Project Manager at IT Development Centre (ITDC) believes that international calls will finally switch to an internet platform, with the help of Skype or other such programmes.

"Active users will pay a fixed monthly sum and be able to make unlimited calls worldwide. If we look at the industry of mobile phones we can see that they are ready for such a revolutionary change," Karakozov says.

Karakozov daily uses Skype, GTalk and Fring mobile software when communicating via his iPhone. He says that Skype is the most popular programme in Georgia compared to other applications.

"It offers P2P technologies which mean that sharing files and video calls is faster than with other programmes. Skype is the direct competitor of international phone operators. It offers international calls by mobile with the cheapest tariffs. I do not have the exact statistic of Skype users in Georgia but in terms of my work I rarely meet customers that do not have Skype already downloaded," Karakozov says.

"Current technologies can let people implement many services and communication methods, the main goal is to have the finances and organize this correctly," Karakozov says.

Karakozov declares that Skype does not occupy a concrete segment of its users.

"As a result of globalization and international migration we all have business partners, friends and relatives in other countries. With the help of modern technologies it is possible for a grandmother to read her grandchild a bedtime story from a completely different country. I have actually seen this in my practice," he says.

George Arghanashvili, Deputy General Director of JSC Global Erty, says that fixed phones are the tradition and that this service will maintain its competitiveness for at least the next 10 years.

Ana Nakashidze, International Carrier Project Director of United Telecom, says Skype is not a replacement for standard telephone communication.

"Communication culture is greatly affected by evolution of technologies and development of various services, but need and demand for high quality telephone communication is unchangeable. Skype and other similar services are not the replacement but an alternative to traditional telephony services with some additional features such as video signal, instant messaging, etc. Such services create an alternative mainly to international and long distance telephony." Ana Nakashidze told The FINANCIAL.

Nakashidze considers that it is difficult to estimate the scale of affect of Skype and alternative services on communications market in Georgia. Fierce competition on market complicates the task for company to definite cause of its market-share fluctuation. Furthermore, no general market studies of affect of such services had been conducted.

"As for international and long distance telephony services in country, dozen of international service providers in Georgia provide services varied in quality and price. The customer therefore has a big choice. The trend shows that business customers prefer to communicate by traditional phone rather than by different software applications and demand high quality services," Nakashidze says.

"As for me, I barely use Skype and if so for instant messaging. My calls abroad are mostly business related and I use international telephony service provided by United Telecom through special access code 8-16. For me Skype has many disadvantages, such as, low quality on voice, frequent cut offs, no number clearing, and if calling to landlines and especially mobiles, the pricing is very high compared to international call tariffs provided by Georgian companies, such as, United Telecom. Unless, I am eager to get video chat with my relatives and friends abroad. I barely use Skype and prefer to use traditional telephony service. And I guess this is a general habit, that Skype is generally used for video conferencing for private purposes."

"Last decade has demonstrated dramatic decrease in tariffs of international calls in Georgia and worldwide. I am optimistic about this service. Simplified regulatory rules and healthy competition in communication sector had and will encourage market growth. The service will certainly not disappear any time in the near future, decade or more" Nakashidze states.

Nakashidze says that based on general available sources and statistics the level of PC penetration in Georgia is low, therefore the affect of computer-to-computer communication is not significant for the total volume of traffic to and from Georgia.

Contrary to Nakashidze, Karakozov says that negotiating with business partners via Skype is not unusual. "It just depends on the type of business," he says. "If you are dealing with a company for the first time then you will obviously be calling the fixed phone of its head office. Whereas if you are already in contact with a certain person and have agreed to communicate by Skype then that would be the norm. Then again business partners often just use email to communicate."

It has already been eight years that United Telecom has been providing international telephony services. New Year's Eve the traffic of international calls both received and dialled, rises by 10%. The annual monthly traffic of international calls is 15-20 million minutes.

The top five countries to which customers of United Telecom are calling the most frequently are Armenia, Ukraine , Russia, Azerbaijan and Turkey. The price to destination varied by calling party location, network and tariff plan, thus call to MOSCOW start per minutes from 0.08 GEL, to Russia is 0.10 GEL. United Telecom provide International call service to mobile network customers, though dial code 8-16 and destination Russia is 0.50 GEL. The call tariffs to Armenia start from 0.14 GEL from 0.11 GEL to Europe and from 0.12 GEL to USA. Currently the company is offering significant discounts on average 40-50% discounts from standard rates effective from February, 2010.

Nukri Chelidze, Director of Lagi, phone communication operator, claims that Skype and other internet software have gained 30-40% of the traffic of international calling services. He says that presently the main advantage of the phone is that it has a long tradition of usage, but further development of internet technologies will force fixed phones to disappear.

It has already been 13 years that Lagi has offered international calling to its customers. Chelidze says that until 2008 demand was highly stable for their service. After that traffic reduced by three times. "This was not due to increased access to the internet but rather the reason that in Georgia there is big competition in the telecommunication sector.

"All companies offering international calls have suffered from Skype and other similar internet programmes," he says.

"Another reason for the reduced income of our company is the effect of the global recession. Customers started shortening the duration of their phone calls," Chelidze reveals.

The majority of calls by Lagi customers are made to Russia, Ukraine , Greece, Italy and the USA. The cost per minute to MOSCOW is 0.10 GEL. 0.30 GEL to Greece, 0.10-0.12 GEL to Italy, and 0.10-0.12 GEL to the USA.

"13 years ago the cost per minute was GEL 2.60. Prices started significantly decreasing from 1999 onwards," Chelidze declares.

"There is no doubt that the development of internet communication affected our business. But the results have so far not been fatal," says Arghanashvili, JSC Global Erty.

Arghanashvili confesses that further development and access to the internet on the Georgian market will continue influencing the market of international calls, but in the next 10 years this service will maintain its competitiveness and will not disappear.

Global Erty was founded in 1996. It is already 14 years that we have been offering customers international calling services. The company had the largest demand for service in 2006-2007. Currently the majority of international calls are made to Europe, Russia, CIS countries and the USA. The cost for a fixed phone call, per minute, is 0.17 GEL to Europe and 0.55 GEL to a mobile phone; to MOSCOW - 12 GEL.

"International phone operators have their loyal customers," says Rusudan Kapanadze, PR Manager of Caucasus Online , one of the leading internet providers.

Caucasus Online has been offering international calling to its customers for the past nine years. The largest demand for their service was in 2002-2005.

"The internet caused a reduction of demand for international calling by 15-20%. But our service will not disappear. We are currently trying to keep customers loyal with our new marketing activity," Kapanadze says.

Source: The Financial

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