Skype’s unlimited calling plans: let the price war begin!

Skype’s unlimited calling plans, announced earlier today will surely prompt a price war against the independent VoIP service providers.

The question is: can either camp win?

The answer is no.

Here’s why. Beginning Tuesday, Skype users will be able to call landlines in 34 countries for $9.95 a month. Skype also offers unlimited calls for users in the U.S. and Canada for $2.95 a month.

The move thrusts Skype back into the limelight again and will likely spark a series of price cuts from competitors because the new offerings potentially gives eBay/Skype a small price advantage. That’s assuming of course users compare the plan to similar offerings from VoIP service providers such as Vonage.

By comparison, Vonage Canada users can call landlines in China or Argentina, for $0.02 a minute. As part of a $40 monthly package, Vonage Canada users can call anywhere in the U.S., Canada for free.

To my mind, that makes the plans from Vonage and other providers potentially more expensive packages though it depends on user calling patterns of course.

Regardless, if Skype is able to bring in new customers as a result of the new plans, competitors will have little choice but to slash prices.

That makes the VoIP consumer service game one of diminishing returns.

It’s already a tough slog for Internet phone companies trying to grow the top line; in recent years cable companies have introduced low-cost phone service as part of triple or quadruple-play telecom service packages.

Vonage has had a particularly rough go of it. The VoIP consumer services pioneer has lost patent lawsuits to Verizon and Vonage, which drained the company of roughly over US$200-million in cash and put it dangerously close to the point of bankruptcy.

So what happens to the likes of Skype, Vonage, Yak and the dozens of other pure play VoIP service providers operating in Canada and the U.S.? If eBay gets its way, it’ll pull a Niklas Zennstrom on someone and pawn the company off on some other unsuspecting firm for an outrageous sum of money. The more likely scenario will be that it’s sold for a modest sum at some point over the next two to three years.

Anyway, some VoIP service providers can survive as independent entities for the foreseeable future but most will either die on the vine or get snapped up if they’re lucky. The race to the bottom is on.

Technorati Tags: Skype, Vonage, VoIP, Niklas Zennstrom, eBay