...ne months of 2005. The company spends so much on marketing that it is almostimpossible to make money from low spending subscribers. Averagesingle line subscribers paid $26.73 per month in 2005. But thecompany spent $213.77 per subscriber on marketing. That means itwould take more than 8 months to recoup their up front marketingcosts.Market share is also shrinking and the competition is rampingup. Google, Yahoo and Microsoft are all aggressively enteringthe market.They are als...

...o getting squeezed on the expense side. CurrentlyVOiP providers like Vonage offload the carrier costs to internetsubscribers. But the major telcos are lobbying hard for approvalto charge providers like Vonage extra tool fees for the rampedup level of service required to make wide scale VOiP possible. Pure VOiP providers like Vonage are eating into the traditionalmarket of the telcos. So it seems almost inevitable that thetelcos will retaliate in various ways to either hold on to theircustomer base, or convert customers to their own services. **Other developments in VoIPMicrosoft - Gates and company will be entering the VoIP marketaggressively in 2006. The new version of MSN Messenger, calledWindows Live Messenger will have advanced VoIP capabilities, andan interface with the traditional phone system through anagreement with MCI. This alliance with MCI is Microsoft's way ofavoiding the threat of telco toll charges.As with Skype, PC to PC calls will be free using Windows LiveMessenger. Microsoft and MCI claim that PC to landline callswill cost only a few cents a minute, and much less than someother alternatives currently being developed.Google - Much like Microsoft and Yahoo, Google is putting thepieces together to offer a comprehensive PC to PC chat/voiceservice, as well as a PC to landline service. That would takeGoogle just one relatively small step from becoming a completeVoIP provider.Google released Google Talk last August, and recently announcedthe release of Gmail Chat which integrates GMail and Chat. Forvoice capability, users still have to download the Google Talkclient, but it is just a matter of time before there is oneclient for all three services (mail, chat, talk).The company has also confirmed that it is working with VoiceOne,a Florida company owned by VoIP Inc. VoiceOne is providingGoogle with "click-to-call" services. This free service letspeople speak directly to Adwords advertisers who come up insearches, with the costs, presumably, being covered byadvertisers.Yahoo - Yahoo announced in December that they will offer two newfee-based voice over IP services so customers can make voicecalls from a PC to a telephone and receive phone calls on a PC.The new VoIP services are called Phone Out and Phone In and arepart of Yahoo Messenger with Voice.Phone Out will let users to make calls from a PC to traditionalor mobile phones in more than 180 countries. Projected cost willbe $0.01 per minute to the U.S. and less than $0.02 per minuteto more than 30 international countries.Phone In will let users receive calls on a PC from traditionalor mobile phones for $2.99 a month. Multiple phone numbers willbe available for travelers, and phone numbers in differentcountries will be available so people who call them from thatarea will only pay for a local call. This is very similar toSkype's current offerings (see below).Skype - EBay bought Skype in 2005 for $2.6 billion, so chancesare they have big plans for the service. Skype offers a range ofVoIP services, but so far all require at least one user betethered to a PC with a broadband connection. Services includefree computer-to-computer calls, as well as paid calls from a PCto the public network (SkypeOut) or public phone to PC(SkypeIn). With the release of Skype 2.0, the company has announced anumber of enhancements to their core service such asteleconferencing capability, and video calling. Another usefulservice is Skype VoiceMail. Callers from anywhere can call yournumber and leave a voice mail on your computer.Judging from their web-centric approach to VoIP, Skype does nothave plans to directly compete with the telcos for traditionalphone business. However, they are well-positioned to offerclick-to-call services to everything from community and datingwebsites, to EBay itself.