PalmAddicts: Skype booming on iPhone: just a placebo effect?

No, woman, no cry 3x
‘ere, little darlin, don’t shed no tears
Good friends we have, oh, good friends we’ve lost
Along the way
In this great future, you can’t forget your past;
So dry your tears, I seh:
No, woman, no cry 4x

As almost everybody tuned in to the latest episodes of American Idol, which one of the contestant performed Bob Marley’s song, that made me to dig up my old music collection and listen once more an addictive song with catchy phrase: No Woman No Cry. For me, the song resemble the current love-hate relations between AT&T (and any other wireless carriers for iPhone) with Skype. How so? Hear me out for awhile…

For the last week, there’s one particular app which became the headline in every tech blogs and especially on every iPhone news: Skype app. It was formally launched on App Store last Tuesday, and since then it has been downloaded 1 million times in less than two days, meaning Skype app was downloaded six times per second!

If there’s any doubt that users are yearning for making cheap calls using VoIP on iPhone, this is one solid proof to erase that doubt. "In less than two days, Skype for iPhone has been downloaded more than one million times -- around six downloads every second," the company wrote in a blog post.

But is Skype for iPhone really that good? Or is it just having a placebo effect from a booming popularity? Let’s find out.

A questionable restriction

The users may rejoice for the arrival of Skype on iPhone, but it’s the other way around situation for wireless carriers who exclusively support the iPhone on their networks. As a matter of fact, they are now forced to see what the future of wireless service will be: cheaper calls with VoIP. If Skype is only the beginning of the new wave, then wireless carriers is looking to change their business model from offering phone service to selling data service. Right now their main revenue comes from the phone service, and the data service is seen as only additional income.

So to protect their core of business model, AT&T (together with Apple) put a restriction on iPhone that VoIP can only be made on WiFi connection. Quickly enough, the restriction raises plenty of complaints and criticism, plenty enough for an advocacy group called Free Press who on Friday called the Federal Communications Commission (FCC) that such restriction is another violation of consumer’s right to access broadband internet. The open letter to FCC is referring to FCC's Internet Policy Statement that stated "consumers are entitled to run applications and use services of their choice" in order to "preserve and promote the open and interconnected nature of the public Internet."

But according to Jim Cicconi, AT&T's top public policy executive who was interviewed by USA Today says AT&T has “every right” not to promote competitor’s service: "Skype is a competitor, just like Verizon or Sprint or T-Mobile. Skype has no obligation to market AT&T services. Why should the reverse be true?” Cicconi then added: “We absolutely expect our vendors (Apple, in this case) not to facilitate the services of our competitors.”

AT&T recognizes Skype as a competitor, and if we see the rates offered by both company then you know why AT&T is afraid of Skype: an average Skype call to landlines costs you 2.1 cents per minute, while AT&T charges 35-45 cents per minute for each additional minute spent outside your voice plan. Compare them yourself by seeing these Skype’s and AT&T’s call rates.

Even worse in Germany, Deutsche Telekom (who own T-Mobile and T-Com) has declared plan to ban the use of the Skype app on both its 3G network and its extensive Wi-Fi hot spot network, further more they will cancel the contracts of any users who use workarounds to run the program anyway. Deutsche Telekom‘s reason is that the VoIP app uses too much of high data which will choke the network infrastructure, and most of all that the use of VoIP violates the customer contract.

Immediately, the Voice on the Net coalition, which includes Skype, (also Microsoft and Intel), has asked the European Union to look over at Deutsche Telekom‘s restriction policy and help protect consumers rights to choose freely what applications they want to use.

"Technical concerns have no grounds," Skype's general counsel Robert Miller told Financial Times. "It's much more about competition," he added. And the Skype’s general counsel puts in more weight in the company’s blog by saying: "They pretend that their action has to do with technical concerns: this is baseless. Skype works perfectly well on iPhone, as hundreds of thousands of people globally can already readily attest."

It’s a real pity for iPhone users in German, since Skype app has already sit at the top free app on the German App Store. And as for those who are in the U.S. there are more other things to worry about, like tax…

Taxable VoIP service

Although AT&T is limiting the use of VoIP only with WiFi connection, in the U.S. both Verizon and T-Mobile allow VoIP service like Skype to run on their cellular networks. For now that’s a relieving good news for mobile users there, but that may change when U.S. lawmakers are beginning to question the needs to collect tax on the VoIP service.

Members of the House of Representatives Judiciary Committee's commercial and administrative law subcommittee on Tuesday expressed concern that some VoIP services could escape state or local taxes because of the mobility of VoIP equipment.

Cole and John Barnes, director of product management and development for Verizon Business, asked the lawmakers to include VoIP in a law governing how mobile-phone service is taxed. "The technology has simply outpaced the rules that apply to taxation for telephone services," Barnes said. "A new system is needed to determine state and local taxation for VoIP services."

The cheap solution for making calls will become not so cheap anymore once it’s being taxed, when this become a reality then the wireless carriers will be the ones who rejoice, not users.

What’s Skype real use for iPhone users?

Here’s a really down-to-core and yet intriguing question about Skype for iPhone: “If you've already got an iPhone, what's the point of having an app to make a call?” As the name of the device itself says what its main purpose is for, and obviously it’s still easier to make calls with the old fashion way rather than launching an app first to do it.

And let’s not forget that if you’re allowed to launch Skype only on WiFi network, then you must find a hot-spot first before able to make a call. Thus decrease the whole meaning of being mobile by owning a mobile smartphone (cue goes to the roadwarriors).

That’s one way to argue why you put Skype app into your iPhone, but the true power of the app comes when you take the device to a broader territory. Let’s say you’re out of town and wish to make a call to your mom, telling her how much you love her (awww…. ;-p), then using VoIP is a no-brainer more cheaper way than the carrier’s charge over the voice plan.

It gets better when you’re out of the country, outside your home country, where the cellular network is not available locally. Then VoIP like Skype will save a ton of cash, rather than buy a local SIM card just so your iPhone can have a decent reception to make calls. Ooops, and you’ll also need to unlock your iPhone to do that, meaning you’ll void its legal warranty.

All in all, Skype for iPhone holds many advantages and dis-advantages based on how you’re going to use it. The base line is, users should receive most of the advantages from VoIP service rather than not.

The onus is in the wireless carriers’ hands

Either AT&T or other wireless carriers acknowledge it or not, we all agree that VoIP will become a part of convergence mobile devices in the future that combines cutting-edge computing with portability. Verizon and T-Mobile have already allowed Skype in the U.S., so it’ll be only a matter of time where AT&T will be forced to follow the trend.

I like better on how David Coursey from PC World describes the future of VoIP in smartphones: “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.” That’s true, there will be a lot of fights from both camps: wireless carriers vs. users. But we already know how this will end…

On the other hand; Apple has yet to reveal their real opinion in public, but there are signs that tell the Cupertino-based company supports the use of full VoIP service on iPhone. Users who are trying to run Skype on cellular network with iPhone 2.x software will see the "call over 3G networks are not supported" message, although according to 9to5Mac report it can be done with the iPhone OS 3.0 software beta.

9to5Mac was able to make and receive VoIP calls over both AT&T's 3G and EDGE cellular networks. While ComputerWorld blogger Seth Weintraub tried the Skype app too and said that the call quality easily exceeds a regular voice call. These tell us that Apple is not limiting VoIP, but instead they prepared more extensive use of the service. We’ll know for sure later in June, where Apple is also expected to present not just one but two refreshed iPhone models.

In the end, it is up to wireless carriers to decide whether to allow VoIP on the iPhone or not. Without doubt iPhone has become the most promising hardware sales revenue for almost every wireless carriers, especially for AT&T, but with this VoIP dilemma things could be different for them in not so distant future.

If you can’t beat ‘em, join ‘em… that the saying goes. And that’s what AT&T and Deutsche Telekom should do, otherwise they’ll soon singin’ the above Bob Marley’s song lyric but with the “woman” word changed into “iPhone”. ~LOL~

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