Skype to allow iPhone users to bypass AT&T to make calls

EBay's Skype subsidiary plans to release a version of its Internet-based phone software for Apple's iPhone. The move puts Skype in competition for wireless voice services with network operators such as AT&T and Verizon Wireless.

Skype's free software allows iPhone users to call other Skype users on computers or supported cellphones free if they are in a Wi-Fi hot spot. Or they may call land line phones for a fee, typically 2.1 cents a minute.

Skype already offers software for smart phones using Microsoft's Windows Mobile operating system, which the company says has been downloaded 12 million times since 2005. It released a version of the software in January for the Android G1 phone, a product backed by Google, and says it will introduce a version that works on BlackBerry devices later this year.

Skype uses VoIP (Voice over Internet protocol), which treats calls as data like email messages or Web pages and routes them over the Internet, rather than a traditional phone network. It has more than 400 million users around the world.

Skype's chief operating officer Scott Durchslag said the iPhone product is part of Skype's push toward cellphones, as opposed to the calls from computers, for which Skype is known. Mobile devices are "where the majority of the world's conversations are happening these days," he said.

Skype's move into mobile communications could threaten the business of wireless carriers, which generate the bulk of their revenue from cellphone calling plans. One sign of that tension is that the Skype iPhone software makes calls only when users are connected to a Wi-Fi network, and not over the AT&T 3G data network that US iPhone users already pay to access. Wi-Fi offers short-range wireless broadband Internet access around a "hot spot."

The software would also work with the iPod Touch -- which offers the same Wi-Fi capability as the iPhone without having to buy a cellphone plan -- but would require the user to purchase a microphone.

Durchslag said Apple's terms of service for software distributed through its iPhone App Store forbid Skype from accessing the AT&T 3G data network. In the US, Skype users can make calls over the 3G network on Android G1 on Deutsche Telekom AG's T-Mobile, as well as on the HTC Touch Pro on Verizon Wireless.

AT&T's terms of service for wireless data users don't specifically bar Internet calling on its other devices, but generally prohibit applications that would strain the company's network with too much data traffic.

Mobile data services can be expensive. Verizon, for example, charges about $2 a megabyte on some Web browsing plans, and a Skype call typically requires one to 6.25 kilobytes a second -- translating to about $4 in data charges for a 10-minute call. Such charges might undermine Skype's attractiveness, but users have the option of buying unlimited data-usage plans.

Durchslag said Skype, as a software company, has an advantage over network operators and handset makers in attracting customer loyalty. "We are not tied to a single device. We are not tied to a single network. We are ultimately the most flexible and personalizable vehicle for communication," he said. (info from The Wall Street Journal)