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March 31, 2009

Skype for mobile phones: is the end near for the big cell network carriers? CLICK TO ENLARGE
(NATIONAL) -- As you drive down Sky Valley’s Highway 2 on your way to work today take a good look at that cell phone you own that perhaps you’ve just finished using. As you know it, that device may soon go the way of black plastic LP records, 8-track tapes and audio cassettes.

Yesterday Skype - the Internet calling service that has more than 400 million users around the world - announced that its “Skype for iPhone” application (i.e., software) would be available on the App Store (Apple’s online software store) as a FREE download starting today. It will also be available as free download from Skype’s web site: http://www.skype.com/

Unlike traditional mobile (cell) calls, which are transmitted over a cellular network, Skype turns your voice into data and sends it over the internet.

The Luxembourg-based company (a division of eBay) is making its free software available immediately for Apple’s iPhone and iPod Touch and, beginning in May, for various BlackBerry phones.

Earlier this year Skype announced versions of its software for Nokia phones and phones running Microsoft’s Windows Mobile and Google’s Android operating systems.

Other companies have already made software for those phones that works with Skype, but that software does not offer all of the Skype service’s features.


Using “Skype for iPhone” software – just like using Skype on a desktop computer - users of the iPhone (cell phone) can make FREE Skype-to-Skype telephone calls (over Wi-Fi networks) to other Skype users anywhere in the world.

Regarding the pay-for-use features of the software, users of Skype on mobile phones will pay lower rates than the phone companies would charge when they use Skype to call landlines or other mobile phones that are not using Skype software.

The software also has the ability to send and receive instant messages and receive calls to a personal online number on Skype as well as see when your Skype contacts are online.

Scott Durchslag, Skype's Chief Operating Officer, said that Skype for iPhone provides the same simplicity that the desktop PC software provides to its users. None of this however is big news to European cell phone users. A company called network 3 in 2007 launched the UK’s first Skype handset. Rival applications from Fring and TruPhone are already available for the iPhone in Great Britain.


Bringing Skype to mobile phones has, for the most part, been viewed by cellular operators as threatening to their business. It opens up the possibility that people will use their data plans to make calls using Skype, instead of the more expensive and profitable “voice minutes” on the carriers’ cellular networks.

A new editorial in the tech mag “Network World” says the arrival of Skype software on the iPhone and BlackBerry cell phones will force data carriers to confront a painful and new reality: telephone calls aren't special at all. They are simply common, cheap, regular old data transfers from one point to another.

They are nothing more than digital “data” simply crossing a network that happens to end up on a handset someplace. And that data, writes David Coursey of PC World “shouldn't be priced differently than any other data the network carries.”

Coursey believes carriers and phone companies will fight this new revelation tooth and nail. Why? Look what happened to the once mighty record companies when consumers discovered their music could be wrapped in MP3 audio files (just data files actually) and downloaded, traded and sold over the Internet – many corporate revenue models became obsolete or virtually dead almost overnight.

Big time.

Another analogy might be the revelation of what a thing like the Internet could do in the world of information transfer (again, just data) to the print newspaper business. Remember a thing called the Seattle Post-Intelligencer or a thousand other once mighty newspapers that are no longer on the planet?

Apple, for example is already limiting what Skype will be able to do on its iPhones in order to protect AT&T's business. iPhone users will be able to use Skype when connected to a Wi-Fi network, but not when using AT&T's 3G or EDGE data networks.

That protects AT&T's voice revenue from calls moving to Skype and the “avalanche” of data a Skype caller might create. (Translation: the move sticks a piece of chewing gum in a crack to stop a leak – for now - in a very large dam full of water waiting to escape).


Sure, says Coursey. They just weren’t prepared for it. Coursey says this Genie however, now that it is out of the box, will not be forced back in the box anymore than the recording industry could hold back consumers and home recording enthusiasts from digitizing music and treating it as “just another data file” for transport across the Internet and eventual consumer consumption in the form of MP3 or other audio file types.

He says he understands “the protectionist thinking behind this, but it only underscores why Apple shouldn't control what applications the iPhone can run and handset vendors shouldn't be beholden to the wireless carriers. The idea of charging for calls on a per-minute, or even per-call, basis is no longer relevant to the cellular industry, though it will certainly not go away easily. Such pricing stopped being relevant to the wired telephony business several years ago as people started switching to flat-rate calling plans and international long distance became almost dirt cheap.”

“The cellular carriers have had years to prepare for wireless VoIP (voice over Internet protocol) and still find themselves caught in a bind,” says Coursey.

“Cellular data hasn't really taken off quite yet, so the pricing isn't optimized for heavy users. Not that data plans are too cheap - they aren't - but the pricing isn't based on a user replacing all their voice calls with Skype calls, either. On the other hand, Vonage and magicJack haven't caused my DSL bill to increase. Both can also be used with a wireless data card plugged into a PC. The appearance of Skype on wireless handsets will not change the world overnight. However, it will drag the wireless industry forward, even if there is some kicking-and-screaming involved.”

At present, even if Skype could be used on iPhones over the wireless data network, it would still be easier to make calls the “old-fashioned way.” And things will remain as they are until Apple makes a software change that gives users the option of how their calls are routed.

Coursey writes that now would be a great opportunity for BlackBerry, Android, or some other handset to take steal thunder away from the iPhone by being the first U.S. carrier to embrace VoIP over its wireless network. It would make a big splash and sell a bunch of handsets, particularly to price-sensitive businesses, he says.

“With apologies to REM,” says Coursey, “Skype coming to the iPhone marks the beginning of the end of the phone as we know it. And I feel fine even if Apple and AT&T don’t.”

Editor’s Note: you can view PC World’s review of the new Skype for iPhone App HERE



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