57 thoughts on “Skype & Verizon's Fear of the iPhone”

  1. Verizon Wireless isn’t bothered by the iPhone. No point in having some whiny fashionistas who use too much of the whole network, the same bunch who keeps begging to get on the Verizon Wireless. Verizon Wireless sees these whiners as too much trouble for their worth. And it isn’t exactly falling over all itself to try to get the Apple’s has-been iToy in its network. It’s focusing on building up hot Android phones. Verizon Wireless kicked Steve Jobs to the curb when he tried to get the iPhone in its network before; when Jobs comes around again, he’s better be frog-hopping as he begs.

    1. Tim,
      Just emerged from a coma? Your comment has got to be the dumbest reply I’ve seen in awhile.

      I’m surprised the Verizon board or shareholders haven’t sacked the CEO for refusing Apple in the first place. But then again, Verizon’s anti-wifi, anti-skype, anti-anything that will reduce pay-for-minute services on their network is antithetical to the iPhone model anyway. I can see why the two companies have not come to an agreement.

      AT&T, on the other hand, signed up, “product unseen” — can’t beat faith. Frankly, probably a hail Mary on AT&T’s part.

      1. Hamstah,

        You make some great points. Actually Denny Strigl who was Verizon’s President, COO, and former CEO of Verizon Wireless suddenly “retired” at the end of 2009. Denny was blamed for the loss of the iPhone.
        One thing to keep in mind is Verizon’s roots are in old school POTS service. The company has not been able to market, leverage, or deploy any new technologies since the 60’s. The company is still run by 1960’s style Bell-heads.
        One can point to VZW size as success but VZW customer base has not been grown organically. Verizon’s churn is up and the first 3 quarters of 2009 the net adds were spotty. VZW is running scared of the iPhone but the company is not nimble enough, have the vision, or leadership to best ATT and the iphone.

    2. Tim,

      Wow! “No point in having some whiny fashionistas”???

      How about the point of having new subscriber adds, with low Subscriber Acquisition Cost (since Apple is doing lots of the marketing spend). That kind of thing appeals to carriers.

      How about the point of having a bunch of subscribers whose ARPUs are in the $90 zone? I’ve heard it said that mobile carriers like that kind of revenue.

      So maybe you’re right, VZW is not “falling all over itself” to get the iPhone. But it most certainly IS falling all over itself to get a viable competitor to the iPhone. It is working with trusted partners (RIM Storm) until that fails, then working with the hated Google, which is working a bit, and now working with the hated Skype. What part of that doesn’t seem like a company falling all over itself?

      Yes, VZW sent Apple packing years ago. Do you really think they are patting themselves on the back for that one? They brushed-off Apple because an Apple phone threatened to break established carrier control in content and customer ownership. I mean, through an iPhone, companies like Skype and Google could offer their services to the consumer outside the walled garden, with no toll-booth or controls put in place by the carrier! They had to stop that, so they turned down Mr. Jobs.

      And then what happened? Despite their rebuke, an Apple phone broke established carrier control in content and customer ownership. Only problem for VZW is, AT&T is the only US carrier getting the boost from the iPhone.

      I’ve noted of late that the anti-fanboi screeds are less informed than even the fanboi rants. You two groups deserve each other. Like and acid and a base, maybe if we mixed the two sides together, we’d neutralize the “fail” and have some hope at a rational, cogent argument – but for now we get posts like yours.

      RE: the VZW/Skype hookup; Gosh! I love competition. The iPhone has been making the industry scramble for three great years. Citizens, whether you own one or not, you are benefiting greatly from its presence.

      Derek Kerton

      PS: I use a WinMo phone. That is worthy of some derision. But if you’re going to try to make fun of me for foolish loyalty to a shiny brand, you’ll need to make it WinMo with an SPB UI.

  2. This may explain why 3G support for Skype has not been enabled on iPhone. VZW may have required Skype to hold back on the upgrade because it would have upstaged this announcement if AT&T already offered Skype 3G. For all we know there may even be an exclusivity clause that could keep Skype 3G off iPhone for a period of time.

    1. Actually, there are at least 2 VOIP that works on the iPhone over 3g already. I’ve written an article on February 3 about that.

      I have no need for VOIP, so I didn’t really check, but I believe one of the iPhone apps allowed can already connect to skype.

      1. Yes, Fring can be used to make skype calls over 3g (infact I have also used it over 2g/2.5g and the voice quality was not too bad.
        I think Peter may have a point here. When Apple relaxed their VOIP norms, Skype said they are optimizing their app to get a better quality over 3g networks and they suddenly come and launch the app over verizon network

  3. Your last paragraph is a little confusing, what with the double negative and all. To clarify, did Skype or Verizona answer you at all when you asked them if this arrangment was exclusive? Did they say, “no comment” or give some other “non-answer” or simply shut up? What exactly happened?

    1. AS

      Sorry for the confusion, though I am not sure how I could be more clearer.

      Just to explain: No Skype isn’t answering the question about its deal with Verizon. In fact I asked them the question about the deal many different ways and they would only say no-comment.

      1. Om,

        You could have been “more clear(er)” by using decent grammar in the last paragraph of your article. To quote:

        “Neither Skype nor Verizon would not respond to my question…”

        In that sentence you are saying Verizon and Skype each declined (“Neither Skype nor Verizon”) to stay silent (“would not respond”) in response to your question.

        In case I’m not clear, your sentence reads as ‘Skype and Verizon would not not respond’. That is confusing as all hell. I’m not at all surprised that their only response was “No comment”.

      2. Guys,

        Om’s writing (one extra ‘not’ excepted) seems pretty clear to me. The operative part is:

        “Verizon is using Skype to fight off competition.”

        Does a company fight off competition by offering an exclusive, or by not having exclusives?

        Om suspects there IS an exclusive.

  4. While the comment on that VzW’s 3G network doesn’t work everywhere is correct – for this Skype Mobile it isn’t that important. They only use it for the basic presence and IM capabilities – which will do fine over their 2G network as well. They use their robust cellular voice radio network (at least until it hits the Skype box in their core) for the actual voice. So the limitations on coverage of their 3G is not going to effect it. I’ve got more on my blog

  5. “Skype & Verizon’s Fear of the iPhone” – at first, reading the title, I assumed it meant that BOTH Skype AND Verizon had a fear of the iPhone!

  6. Wow Tim, you’re pretty out of touch with the state of the US cellular industry. It’s well known that iPhone subscribers bring in a higher revenue than most other subscribers. Verizon would be foolish not to want seek that crowd.

    Fashionistas? Please, it’s 2010, not 2007.

  7. iphone was a big advance in todays phone and that no phone can nearly match as close but only copy it but the droid is kinda like da iphone because google software is in the iphone if you noticed

  8. The iPhone can do Skype calls over 3G…once Skype updates its application.

    Verizon smartphones cannot connect to a data network during a voice call.

      1. on the 3 skypephone system calls to skypein (DID) numbers do not reach handsets, only calls originating from other skype clients. this is significant because it could mean free inbound calls from the PSTN or not.

      2. Tom. Good point. Bear in mind, though, that the way the service is offered will differ significantly between the UK (Hutchison Whampoa’s “3” network) and Verizon wireless.

        The reason is that the UK has Calling Party Pays, and wireless carriers make money off the Calling Party by terminating their calls to mobile, while the US has “mobile party pays” for wireless Minutes of Use.

        Thus, Hutch has a very big incentive NOT to terminate PSTN calls to Skype on the mobile, where VZW does not.

  9. I can’t help but consider another reason would be to keep control over this service Skype provides at a ridiculously lower price also. For around $12.00 a month with a wifi phone you can call unlimited in the US. Although I have no experience with it, my son uses it and the only drawback is he must have a good wifi connection and remain stationary.

    So maybe Verizon keeps it on their network because of a quality of service issue. As long as it is unlimited and doesn’t effect your cellular minutes well then that’s OK.

    It would be something if skype improved the quality of their service enough to work well in a wifi blanketed zone for example. That would upset all of the mobile guys. Maybe they are pulling a Google from back in the day when they were yahoo search.

    1. When you coin a phrase like “wifi blanketed zone” (I googled it, and got one hit – this page) you need to explain what you mean.

      Cellular networks automagically transfer your connection as you move from one zone to another. Wi-Fi doesn’t do that.

      You can’t receive a wi-fi call until you log on to a wi-fi network. If you move out of range of the network, you have to find and log in to another network and sign on to Skype again. In the meanwhile, your call will be disconnected. Even if the switch from one wi-fi network to another were seamless, your call would still be disconnected, because your IP address changed.

      MOBILE calls (as opposed to WIRELESS calls) require cellular technology. There is no way around that.

      1. Steve W,

        “MOBILE calls (as opposed to WIRELESS calls) require cellular technology. There is no way around that.”

        There are ways around that. See: Kineto, UMA, Bridgeport networks, IP PBX, BelAir…

  10. Skype should be afraid too. Imagine iChat with a VOIP phone number pre loaded on your iPhone without any stupid verizon limitations. Maybe ATT goes all in with the idea that they are just a dumb pipe and iPhone customers use VOIP for 100% of their calls. Now that would be a value proposition that would put Verizon at a competitive disadvantage.

      1. I wouldn’t recommend it!!

        You’ll spend big roaming abroad using VoIP over a 3G data network. Voice roaming rates are a big gouge by carriers, and data roaming is even worse.

        Figure that an average US carrier charges about $0.08/min for cellular in the USA. They charge about $1.30/min in Western Europe. That’s a 16x multiple.

        Now figure that the average US carrier has a 5GB data plan for phones at about $30. That’s about $0.006/MB for domestic data use. Typical data roaming rates are $0.02/Kb, or about $20/MB. That’s a 3413x multiple. Yep, go ahead and check my numbers.

        People have complained for years about the high prices of international voice roaming. European Telecoms regulator Vivianne Redding famously imposed caps for European carriers limiting the price they could charge visitors (which sadly, only applies to EU travelers, not US-based visitors). The complaints and regulations stem from a 16x multiple, a 1600% markup. So what do carriers do with data? They institute a 341,300% markup on data for travelers.

        Seriously, this goes far, far beyond the pale.

      2. If I’m roaming on a 3G network in Europe and have Verizon’s unlimited international data plan, wouldn’t my calls made over Skype Mobile be covered without additional charges (apart from whatever rates Skype charges for the calls in question)?

  11. I don’t know why wifi enabled handsets have been left out. Is it that the application is being launched on various handsets in phases and we shall soon see one for advanced handsets? I cannot think of any logic for Skype/Verizon to not allow calls over wifi.

    Secondly, this is’nt something new. This offering has been tried by 3 UK & Skype before and I am not sure if it helped 3 UK compete against O2’s iPhone or even made it win a considerable number of customers. Infact, with Verizon they still want you to buy Voice & data plans whereas 3 UK was giving this for free- you could buy a prepaid SIM and use skype for life without topping up. Not sure what verizon thinks will be different for them.

  12. Will the Skype service work on VZW prepaid plans?

    …and will VZW/Skype make the service available to VZW wholesale partners, especially Tracfone??

  13. This only confirms my thoughts that Marc Andreeson and Co have got the steal of the year
    Appalling business move yet again by Ebay
    Standby for Skype going public first QTR 2011.

  14. Hi Om,

    You wrote, “Despite the company’s boasting, there are a lot of places where Verizon’s 3G network doesn’t quite work…”

    I wouldn’t be surprised if the calls were routed over the voice channel, rather than the data channel. That’s how Hutchison 3’s “Skypephone” works.

  15. if i already have unlimited voice minutes does this have any benefit over the skype lite that has long been available?

  16. Om, I am curious if you had anyone verify that the Skype VZW client would prohibit you from doing a VoWiFi version? I think the VZW vs. ATT implementation is a great comparison of over the top VoLGA compared to 3G One Voice architectures. I can’t wait to do a taste comparison.

  17. I am not sure the Verizon doesn’t care about the iPhone, I highly doubt that is the case. The exclusivity that at&t had on the Razor and then the iPhone has been one of the main things that kept them strong. I stick with Verizon because I need the strong coverage everywhere. Since I am in the auto transport industry we are all over the place. I really hope Verizon gets the rights for iPhone this summer.

  18. Hi Om,

    Interesting post – I think your reasoning on the Verizon perspective is clear and plausible.

    Could you expand on the post’s title: “Skype & Verizon’s fear of the Iphone” – What, exactly, is Skype’s fear? Isn’t this yet another example of Skype winning ground, adding distribution and platform availability to millions of customers? With the 3G VoIP ban removed, and the fact that Skype has an excellent free Skype app – Skype just keeps on truckin’ – also on the IPhone.

  19. Seriously who uses Skype except for penny pinching nerds. Perhaps for international, but when my web designer calls me via skype, I immediately have him call me back via a land line or cell phone because Skype quality is horrible. I hate Skype and anyone who uses it.

    1. SFTitan, I have had complete opposite experiences. Using Skype I have found call quality which is at times better than regular cellular calls. I can very clearly hear even the faintest of background noises on a skype call. Not sure why you have had bad experiences. Maybe your web designer doesn’t have enought bandwidth at his end

  20. Excellent post, and the lack of an update for Skype on the iPhone to use 3G is just a big proof of all that. Verizon is aggressive and I can see why, too bad Skype made a deal limiting what we have on the iPhone, after all we consumers are the ones paying for Skype to grow.

  21. As Tim said the ibrick is nothing to be afraid of. AT&T’s network despite them trying to convince people otherwise is dreadful. The iphone doesn’t have flash, something just about every serious smartphone has now. Not to mention the most downloaded app on the app store is an app where you see how long you can keep your finger on the button. How can you even take something like that seriously? BTW, it’s also 99 cents. Verizon is not afraid of the iphone nor do they have any reason to be. When iphone users get tired of their toy, they’ll eventually switch to a real cell carrier, with real usable phones. AT&T has the slowest 3G network of any major U.S. carrier and the lowest customer satisfaction of any

  22. I only look forward (GSM) to the day i can load a sim card into my phone, take it out and throw it away. Data on it will be copied onto the communication device, & have a backup sent to my online store for remote-secure storage (cloud). phones, utilities and the current central system of communication have to change. i’m more interested in the Ad-Hoc GSM systems that are not being allowed to hit the market. i feel those systems would really force the real changes needed in the current greedy cozy-US-market.
    forget open access if you have to do it through a telecom. the public should have its own public spectrum with real open access. coast to coast. planetary even!
    All humans should have a right to communicate for free!

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