Watch CBSN Live

Skype Grows Up

Skype, the Internet phone company founded in Luxembourg back in 2003 and acquired by eBay in 2005, is growing up. There was a time when Skype could only be used to call from one PC to another. But they now have SkypeOut and SkypeIn, which make it possible to call regular landline and cell phones and receive calls through your own phone number.

Though "Skype to Skype" calls between PCs or special Skype phones are free, the company does charge for calls to landlines and cell phones as well as for receiving calls from regular phones because the company has to pay fees to local phone companies for calls to or from landlines or cell phones.

The cost of a SkypeOut call depends on where you're calling, but is typically 2 cents a minute when calling landlines anywhere in the U.S. or Canada and in many other countries as well.

As with any Internet phone service, there is a surcharge for calling cell phones in most countries because outside North America, the caller - not the cellular subscriber - pays airtime. For $30 a year you can purchase unlimited outgoing calls to anywhere in the U.S. and Canada (including cell phones).

SkypeIn costs $18 for three months or $60 per year which means that for about $90 a year, you can use Skype for all your incoming and outgoing calls and never have to pay for long distance calls within the U.S. or Canada. That's a lot cheaper than getting a VOIP line from Vonage, your cable company and most other services and also a lot cheaper than a line from the phone company.

Unlike your regular phone or even most cell phones, you can use it from anywhere in the world, as long as you have an Internet connection. And unlike a cell phone, you don't have to worry about going over your minutes.

My kids, who are in their 20s - typical of their generation - don't have landlines but use cell phones for all their incoming and outgoing calls. Perhaps it would be cost effective to use Skype at home and save their minutes for when they're on the road. Besides, Dad would prefer it if they had a real phone at home since I often can't get through to their cell phones.

Skype is also making a big push to encourage video calls. The company recently improved video calling for its latest PC version, which you can download and use for free.

Video calling was first demonstrated at the 1964 World's Fair in New York but it's come of age lately, largely due to the growth of high-speed Internet as well as better cameras and free services like Skype video. While I can think of reasons I wouldn't want to make a video call (like the way I look first thing in the morning), I've come to appreciate the value it can add to calls.

The benefit of a parent or grandparent using video to communicate with a child is obvious but even calls between adults can benefit from video. I was recently on a business video call that kept me a bit more engaged. But even more interesting, I found myself paying attention to the other person's facial expressions, which really did convey more than just what I was getting from his voice.

I'm not suggesting that video ought to replace audio only for all calls, but video does have its place and can add value so long as it doesn't get in the way by adding complexity to the process or by degrading the signal.

I recently tested the new Skype version for Windows and was impressed by the quality of video calls. Of course, the actual quality of both the image and voice depends on network bandwidth on both ends and in the middle.

I have a pretty fast cable modem and the people on the other end of the call also had pretty good bandwidth. The one time I chatted with someone with a slower connection, the picture was a little bit "pixilated" and he would sometimes freeze up during the call, but the overall quality was still OK.

Another factor is the quality of the webcam. While Skype will work with just about any webcam, it's optimized for a new series of cameras from Logitech. I tested it with the Logitech Quickcam Pro 9000 (available from Skype for $79.99 after rebate) in use on both ends of the phone call.

In addition to being able to keep up with at least some level of subject motion, Quickcam Pro has autofocus and Carl Zeiss optics and what Logitech calls "RightLight Technology" that helps correct for poor lighting conditions. With this camera the person can see you in full screen mode instead of only in a small window on the screen. The camera also has a built-in microphone but to get the best audio quality, I recommend using a headset or a standard microphone.

Another significant development for Skype is the launch of devices that free you from having to make or receive calls from a PC.

Philips' new VOIP841 cordless phone comes with a base station that connects directly to your Internet router, so you don't even have to have a PC running to make and receive calls. The phone also connects to your standard phone line so you can use it to make and receive both Skype and regular calls.

The Philips phone was easy to install and easy to use. When you make a call, you're asked if you want to use a landline or SkypeOut. If you have a SkypeIn account, you can answer incoming calls to your Skype number or your regular landline if you have one.

So, there are plenty of Skype options, and, a few more details to keep in mind.

In the U.S., when you are making calls with Skype, your phone number will not show up on caller ID devices used by the people you are calling. That could be inconvenient in some cases - say, when calling someone whose phone is programmed to reject all unidentified calls.

Skype also doesn't report your location, for instance, and can not be used to call 911. For that reason, Skype urges its users not to rely on their technology as their only phone.

A syndicated technology columnist for over two decades, Larry Magid serves as on air Technology Analyst for CBS Radio News. His technology reports can be heard several times a week on the CBS Radio Network. Magid is the author of several books including "The Little PC Book."
By Larry Magid