Niklas Zennstrom

Yes the calls are free. But you're paying for the mobile access and that drives usage and something that drives usage is good for the operators.

With our work at Kazaa, we began seeing growing broadband connections and more powerful computers and more streaming multimedia, and we saw that the traditional way of communicating by phone no longer made a lot of sense.

We have 2 million users in the U.S. and about 13 million worldwide in more than 200 countries.

We also have a conference call feature where up to five people can talk on one Skype call.

Skype is for any individual who has a broadband Internet connection.

People need to access Skype wirelessly, no matter where they are, and what happens is that we'll be taking advantage of the rollout of Internet everywhere - WiFi and WiMax in particular.

It was more a technical proof of concept that it was possible to transfer files between two end users rather than going through servers.

It is very similar to companies like Google and other internet companies. When you go and search on Google you don't pay for that. But sometimes you click on an advert and Google makes money on that.

In fact, we just surpassed our first 1 million simultaneous users online.

If you could utilize the resources of the end users' computers, you could do things much more efficiently.

If you can use a Web browser, you can use Skype.

But that technology enabled the movie industry to make much more revenue. The single largest revenue source for the movie industry is videos.

At the office, we actually don't have a land phone line. We use Skype mostly, and mobile phones to receive calls from people not on Skype.

At no charge, if they both have the software installed. Or by using SkypeOut if they need to call a land line or mobile at low rates.

Another differentiator is that Skype is free and simple to set up, and it costs us virtually nothing for a new user to join the Skype network, which is why we can offer the service for free.

Then people started using it more and more and it became the most downloaded software on the internet.

The telephone is a 100-year-old technology. It's time for a change. Charging for phone calls is something you did last century.

What we are doing is taking advantage of the broadband Internet to provide basically unlimited free calls to anyone at a higher voice quality than they can with the phone lines.

They also can combine voice with instant messaging and online file sharing.

I'm convinced over time, all voice communication will migrate to the Internet.

We don't have any launch dates yet for any of those platforms. It's going to be wonderful to be able to make a Skype call from cell phones or PDAs.

We have just started, and if you compare the number of people using Skype to the number using a telephone network around the world, we're still just starting.

And the VCR did the same thing the movie industry thought nobody would ever watch movies any more.

There are different rumors every day. We don't comment on rumors. When we make deals, we announce them.

We were founded on Aug. 29, 2003, and now have 70 employees, about half in London and half in Tallinn, Estonia, and some in Luxembourg.