Skype iPhone app is released and all hell breaks loose for FCC and AT&T

Skype has been on Windows Mobile/Windows CE since 2004. I remember trying it out a few years ago on a T-Mobile device here in the US.  It didn't seem like a big deal.  Perhaps because at that point there was only GPRS speeds for data and the application (and the OS) were so clunky, that the ten unintuitive steps I had to do to activate Skype made it too tedious.  It got uninstalled.

Fast forward a few years.  3G wireless data speeds are more than capable of carrying voice data.  Even high quality, better-than-landline SILK audio codec data is easy pickings for modern telco networks.  Add to that a smooth and intuitive user interface that Skype's iPhone application employs.  It also doesn't hurt that just about everyone I know is on Skype, including everyone I work with and even senior members of my family. 

Skype just had over one million iPhone app downloads in two days.  That is over six downloads per second.  One out of every 30 iPhone and iPod touch owners downloaded it in the first two days.  Many more will follow.  Perhaps the enormousness of that feat and the fact that some developers were able to get Skype working over 3G on the 3.0 beta firmware and reported great results has the telcos worried.

block skype

Already T-Mobile in Germany is fighting to keep Skype off of the iPhone.  Canada's least favorite ISP, Rogers, is doing the same.

Add to that the fact that the FCC is being pressured by the open-Internet advocacy group Free Press to make telcos Net neutral.  This means that they won't be able to block certain types of packets -- like Skype and video streaming (and Torrent traffic).   It also means that they will be unable to prevent Internet tethering to be done on phone devices.

This is what has the telcos worried.  A Skype experience that far surpasses that of what AT&T and the others have to offer.  Better call quality, better interface, more features, cheaper cost and more compatibility with other platforms both carrier (Wi-Fi, WiMAX, DSL, Cable, etc.) and operating system (Windows, Mac, Linux, Symbian, etc.).

About the only thing Skype can't do is call 911, which I imagine will be something that the telcos will put forward when they try to convince governments that they need to block Skype.

But it isn't just Skype.  There are many other VoIP players out there.  You'll have heard of Cisco and Vonage and probably Asterisk, but there are hundreds of other players operating on the SIP protocol.  Even Apple's iChat initiates voice and video using SIP.

If the FCC decides to open up the telcos, Apple might be able to release their super secret, fully functional iChat for iPhone application*.

How can the telcos win on this one?  I don't see a way out, VoIP is here to stay -- and it isn't blockable.  It isn't hard to route your VoIP traffic over Web ports or random ports that AT&T isn't looking for.  The current strategy of paying off lobbyists, which in turn, own a few government officials, will only work for so long.

My advice for the telcos?  Embrace the wireless ISP role that you are being forced into.  Three, the UK upstart, includes Skype on all of its smartphones.  While it may lose out on some revenue, it does get a loyal following that may not get ripped off on long distance charges, even if VoIP users will most likely suck up a lot more bandwidth.

How about a data only plan for the iPhone AT&T?  $60/month including tethering.  While it has to sound scary, it is the future. 

Otherwise, I'll do it myself with a Cradlepoint.

*maybe I am making this up

Copyright © 2009 IDG Communications, Inc.

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