Cellcos uneasy as iPhone Skype downloads rocket

by Caroline Gabriel, ReThink Wireless

In creating its mobile client and launching it on the iPhone, Nokia N97 and BlackBerry – all key generators of high operator ARPU – Skype has put the cat among the pigeons, and big hitters on both side of the open internet debate are using the Skype issue to put their case. Consumer advocacy group The Free Press called on the FCC, in a statement on Friday, to force carriers to allow Skype access on their networks; while US cellcos remained predictably negative.

“With Skype and VoIP clients in general, we don’t prohibit them on our network, but at the same time we don’t encourage them on our network,” Scott McElroy, AT&T’s VP of operations, told Unstrung, representing the views of most cellcos, apart from a few openness pioneers like 3. The carriers’ justification for downplaying Skype is that they cannot guarantee the performance of the application, as they will do with their own carrier VoIP apps in future (though the iPhone Skype client only uses Wi-Fi, not 3G).

Deutsche Telekom also came out with warnings about using Skype on the iPhone – even on Wi-Fi, use of the client could contravene T-Mobile terms and conditions, it pointed out on Friday, citing the risk of ‘non-compliance’ with its network. However, the ban does not apply to T-Mobile USA, which seems to weaken this argument. Meanwhile, Telefonica allows Skype over Wi-Fi but not 3G, and Vodafone, like the US majors, does not actively encourage it, but does not impose sanctions.

Fears about application performance are not stopping users from downloading the client software, which has significantly improved the Skype experience on cellphones – some vendors, like Hutchison INQ and Nokia, will even optimize certain models for the voice system. The iPhone Skype version has sparked a superfast distribution process – there were one million downloads in the first two days, according to the software house.

This wave of user enthusiasm is likely to have more impact in changing operators’ minds than any advocacy groups, but the Free Press is trying to get legal clarity in the US too. It called on the FCC to require wireless carriers to allow consumers access to Skype via smartphones, as well as the ability to connect their devices to the internet through tethering applications on their cellphones. This has been another source of cellco unease, which hit the spotlight again recently when Google was reported to have banned a tethering app from Android Market, perhaps to assuage T-Mobile USA. Free Press also cites reports that AT&T may seek to block Skype, despite its recent comments about being cautiously open to the app.

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