02 October 2007

The huge writedown for Skype is not the only disappointment in the Internet telephony world.

SAN FRANCICSO (Fortune) -- Skype never emerged as the cash cow eBay had hoped for when it paid a jaw-dropping $2.6 billion to acquire the
Internet phone startup in 2005. Now eBay's announcement Monday that it
will write off $1.4 billion in charges related to Skype has analysts
and investors questioning whether the Internet phone business - known
as voice over Internet Protocol (VoIP) - has any commercial potential
at all.

Consider: Vonage ,
the largest independent VoIP company with 2.5 million customers in the
United States, and Skype with 220 million subscribers worldwide, have
struggled to make money and compete with traditional telcos like AT&T and Verizon. In July, VoIP provider SunRocket announced it was shutting down operations, leaving some 200,000 customers without service.