Voice Calls Will be Completely Free in a Few Years

In a few short years, users can expect to make telephone calls for free, with no per-minute charges, as part of a package of services through which carriers make money on advertising or transaction fees, eBay's chief executive said on Wednesday.

Seeking to justify eBay's $4 billion purchase last week of Web-based communications phenomenon Skype Technologies, Meg Whitman countered criticism by a financial analyst during the company's quarterly conference call by agreeing with some of his points.

"The percentage of users that you can actually charge for (phone services) will actually go down, so I actually agree with that and we understood that when we looked at Skype," Whitman said in responding to the analyst's question.

"In the end, the price that anyone can provide for voice transmission on the 'Net will trend toward zero," eBay's top executive said.

The company is betting that by combining electronic markets, online payment systems and Web-based communications, eBay can emerge as a leader in all three businesses.

Skype, which allows free Web-based calls between members, ended September with more than 57 million registered users. EBay said it expects Skype to produce estimated revenues of $60 million in 2005, and more than $200 million in 2006.

Whitman said Skype's explosive success, would -- over the next several years -- drive the cost of phone calls to nothing.

The chairman and chief executive of the world's largest online auction site said the transition to completely free voice communications will not happen in the next year or two, but that could happen in the next three to six years.

"Our belief is that the winner in this space will be those that have the largest ecosystem," Whitman said.

"What I mean by that is: the largest number of registered users, the largest number of voice minutes, the largest number of developers who develop the platform, the best product ... that users are willing and want to pay for."

EBay said it had 168.1 registered users for its online auctions as of the end of September. It had 68.0 million active users who signed on to bid or sell in its electronic marketplace over the past 12 months. It had 86.6 million current accounts on its PayPal payment service, it said.

Copyright 2005 Reuters Limited.

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