US Carriers Still Lukewarm on Skype

CTIA Wireless 2009 -- LAS VEGAS -- Major U.S. carriers seem lukewarm on the emergence of Skype and other third-party VOIP clients on the smartphone even as they move toward all-IP Long-Term Evolution (LTE) networks over the next three to five years.

"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, vice president of operations at AT&T Inc. (NYSE: T), told Unstrung yesterday.

Skype Ltd. made a splash here by introducing a client for the Apple Inc. (Nasdaq: AAPL) iPhone while also arriving on the Research In Motion Ltd. (RIM) (Nasdaq: RIMM; Toronto: RIM) BlackBerry. (See Blackberries to Get Skype.) A couple of different Skype and Skype-like clients have been available for the Google (Nasdaq: GOOG)-based G1 smartphone for a while now.

The Skype client for the iPhone lets users make calls only over WiFi, not over the cellular network.

McElroy said AT&T doesn't encourage the use of VOIP clients because the carrier cannot guarantee the software's performance on the current wireless network.

Of course, as AT&T starts to introduce proto-4G LTE networks in 2011, it will essentially be running its own VOIP application, as the network is all-IP and cannot handle voice calls in the same way as 2G and 3G networks.

"When we get to LTE, that will be a purpose-built and digital VOIP network," and at that point, AT&T will be able to ensure carrier-grade reliability and quality of service (QoS), he said.

McElroy did note, however, that AT&T will still need visibility into third-party voice apps even on LTE, "because we still need to provision the network and manage the appropriate QoS for VOIP."

Asked what the rise of third-party VOIP means to AT&T, McElroy gave the usual "still a little early to tell" line.

Verizon Wireless is taking a similar view, in that its executives aren't sure when voice will become "just another packet" on the network.

"Voice has a long tail," Verizon Wireless CEO Lowell AcAdam said when asked that question at a carrier Q&A session earlier in the week. In talking about the move to packetized voice, he recalled how long it took to switch to digital from analog and to 3G from 2G.

Nonetheless, everyday competition is causing voice revenues to fall and the cost of calls to drop, while data revenues are on the rise. This may be one reason why McAdam noted that Verizon is "moving away" from unlimited data plans.

— Dan Jones, Site Editor, Unstrung