Verizon Wireless Yields to the Skype Barbarians

February 17th, 2010 by · 3 Comments

Just a few weeks after AT&T (NYSE:T, news, filings) gave in and said it would allow Skype and Sling onto its 3G network, Verizon (NYSE:VZ, news, filings) followed suit.  At the 2010 Mobile World Congress, Verizon and Skype announced that they will team up to give Skype users:

  • Always on service
  • Unlimited Skype-Skype service
  • Unlimited calling, including SkypeOut international rates
  • Instant messaging via Skype

It’s difficult to understate how big a change this could be if it actually comes to fruition.   And in exchange for giving its customers such flexibility Verizon gets … umm, well…  probably fewer voice minutes and a more heavily burdened data network.

Left unsaid though is just how well Skype will function on 3G networks when it’s not just the bleeding edge guys trying it.  But I can’t help but wondering if that isn’t the very reason why AT&T and Verizon stopped fighting.  By giving in to public demands, they can now respond to congestion with new tiered pricing plans and have a ready-made argument for doing so.   Something along these lines has to happen before long doesn’t it?

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Categories: ILECs, PTTs · VoIP · Wireless

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3 Comments So Far

  • FAC says:

    As Tom Evslin stated during the mid-nineties, when he was moving over to AT&T ‘s newly formed IP unit from Mr. Softie, “If anyone is going to cannibalize our voice services it’s going to be us.”

    Similarly, I think the prospect of an all-IP capability from the Clearwire and others’ WiMAX initiatives holds considerable weight as a threat that needed to be nipped in the bud as well. Your conjecturing, concerning increased use of tiering, makes sense.

  • DaveRusin says:

    Makes the pie bigger and AT&T wireless network coverage and capacity problems can’t keep up ….

  • Justin says:

    Verizon Swallows Hard And Embraces Skype

    Erick Schonfeld
    Tuesday, February 16, 2010; 7:51 AM

    Verizon bowed to the inevitable today and officially embraced Skype on its smartphones, starting with Blackberry and Android devices. Verizon customers will now be able to bypass the outlandish international calling rates on their mobile phones and make free Skype-to-Skype calls or use their much cheaper Skype Out minutes instead. Skype’s text IM will also work on the phones.VoIP applications like Skype’s have gone from facing resistance from the carriers to a reluctant acceptance. Skype already offers one of the most popular apps on the iPhone, and at least it encourages more data usage, which subscribers do pay for. Skype accounted for 12 percent of all international calling minutes last year, and that number will just keep going up. Apps like Skype, along with Web browsing and email, will get consumers hooked on bigger and bigger data plans. Verizon wants to sell that data pipe and fill it with the most attractive applications. It might lose out at
    first as people migrate from making overpriced international calls, but over time building out its recurring data subscription revenues will be a bigger business than international call revenues, which it must share with carriers in other countries and typically are sporadic for most subscribers.Update: Some more details from Andy Abramson at VoIP Watch. He reports that the Skype calls actually will not go over Verizon’s 3G network, but rather over its regular voice network until they hit a network operations center where they will be transferred over to Skype’s Level 3 backbone. This makes more sense, since a high volume of Skype calls over Verizon’s wireless 3G data network could overwhelm it. By striking this deal, Verizon treats the calls as regular local voice calls before passing them off to Skype. So it is actually saving its data network for other uses. But you’ve got to wonder what kind of deal Skype struck and what, if any, share of Skype Out
    revenues Verizon will collect for calls originating from Verizon cell phones.

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