Skype offers software that people can use in order to call other Skype users over the internet. ((Nam Y. Huh/Associated Press))

Last year, people around the world spent 33 billion minutes talking to people in other countries via Skype, a free computer-to-computer voice service — more time than they spent on such calls via any single long-distance telephone provider, says a new report.

"Only five years after its launch, Skype has emerged as the largest provider of cross-border voice communications in the world," said the report released by the U.S.-based market-research firm Telegeography on Tuesday.

Stephan Beckert, an analyst with Telegeography, said in comparison, the largest international phone carriers, such as Verizon, iBasis (an affiliate of KPN), and Tata, each provide about 20 to 30 billion minutes of international traffic each year.

Telegeography specializes in monitoring the international long-distance market, and reports that in general, cross-border telephone traffic around the world grew about 13 per cent a year during the past two years.

Skype, founded in 2003 and owned by eBay Inc. since 2005, offers software that people can download and use for free in order to call other Skype users over the internet. The company also offers a paid service, Skype Out, that allows users to call regular phones from their computer using their Skype account. The latter service, which generated 8.4 billion minutes of calls in 2008, contracts wholesale long-distance carriers to connect its traffic to the telephone network.

Because of that, Beckert said he doesn't think the company is a threat to wholesale carriers. It may affect retail phone companies more, he said, but they are more concerned about competition from local cable companies, as Skype's traffic is collected from many companies around the world rather than one area.

Skype to target mobile, business markets

Overall, Telegeography reported that computer-to-computer Skype traffic grew 72 per cent in the last year, while Skype Out traffic grew 63 per cent, boosting revenues 26 per cent.

"They're both growing very fast," said Beckert. "I expect it will continue growing."

He said new Skype applications are expected for mobile devices that will make it readily available to a large number of people.

In addition, Skype announced this week that it is launching the beta version of a new service targeted at business users.

That's a logical move, Beckert said, but probably won't lead to rapid increases in their traffic.

"If you're a business and you're switching phone service over to Skype from a traditional fixed line or whatever, there's more sort of hurdles to jump as far as confidence."