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> Sounds like he is yet to be shocked to discover why Skype is free :)

Skype isn't riddled with ads.

But its business relies on selling your bandwidth.

What do you mean? Selling bandwidth how? I really am curious here.

All the calls are P2P, and if the peers cannot connect directly, the calls are routed through someone else's computer that's called a supernode. Pretty much none of the actual VoIP traffic touches Skype's servers.

While I'm not sure if it counts as "riddled with ads," Skype is certainly moving in the direction of ads: http://blogs.skype.com/en/2011/03/advertising.html

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