This could be the year of Skype

PEER TO PEER VoIP and chat service Skype has won a major deal with US telco operator Verizon Wireless, according to speculation at Businessweek.

This is a massive deal for Skype and Verizon Wireless, which are due to hold a press conference at the Mobile World Congress in Barcelona today to announce the partnership. The sources hint that the new service will allow end users to make Skype calls over Verizon's 3G data network.

Big telco companies hung back when Skype mobile was unveiled a couple of years ago. Initial fears were that Skype - especially free Skype-to-Skype mobile calls over 3G - would eat into their revenue streams generated from fixed lines. This has been the part of the mobile operators' business model so they were resistant to change.

However, companies like Verizon are finally waking from their slumber and jumping into bed with technology partners like Skype. Despite warily circling for several years, they're gradually working out a viable business model so Skype can enter the mobile ecosystem without treading on anyone's feet. This means testing the waters through an on-going array of revenue source options through different partnership deals as consumer demand for plan old fashion voice calls dries up.

Vanessa Alvarez, an analyst at Frost & Sullivan in Boston says, "Teaming up with Skype could draw new users, who might boost spending on extra features. The agreement sets the stage for similar deals with other carriers"

But the partnership for Verizon is about much more than a deal with Skype. As the second largest telco operator in the US, it needs a killer app to rival the biggest telco in the states, AT&T.

AT&T already has a lucrative and very exclusive deal with Apple's Iphone and Skype is already enabled on its WiFi networks. But, and this is a big but, AT&T has painfully dragged its feet on opening VoIP over 3G for its customers. There is an Iphone Skype version in development so it will work on AT&T's 3G network but it has been in developmental hell because AT&T didn't get its act together - much to its detriment.

Skype diplomatically offered a soothing blog post just two weeks ago during the Ipad launch to say why Iphone users were still waiting for VoIP over 3G:

"What does this have to do with calling over 3G? The SDK (Software Development Kit) which Apple provides to developers like Skype has been upgraded for the Ipad. The new version, 3.2, removes the restrictions on calling over 3G, which is great news.

"You may have seen other apps offering calls over 3G, but we're holding ours back for a little bit longer. Why? So that we can give you the very best audio quality we can. When our 3G-capable Skype for Iphone app is released, it'll let you make calls in wideband audio, giving you greater clarity and fidelity - because that's what you expect from Skype."

So nary a word of the fact that up until October last year, AT&T banned VoIP over 3G and was even scrutinised alongside Apple by the US Federal Communications Commission (FCC). Both parties released the following statement:

"Apple and AT&T required assurances that the revenues from the AT&T voice plans available to Iphone customers would not be reduced by enabling VoIP calling functionality on the Iphone. Thus, AT&T and Apple agreed that Apple would not take affirmative steps to enable an Iphone to use AT&T's wireless service to make VoIP calls."

And who do you think was lobbying the FCC in the first place to investigate carriers from blocking Internet traffic on their wireless networks? Yep. Skype.

Verizon will be the first network to endorse VoIP and it has been a long time coming. Whatever happens in the forthcoming battle between the US telco operators one thing is sure - its customers have been short-changed.

What is hard to figure out is why Skype hasn't been able to find a US deal and business model that mirrors its partnership with Three mobile in the UK. Skype and Three mobile signed on the dotted line in 2006, offering free Skype-to-Skype calls for its customers. In spring 2009, Skype and Three mobile were the first companies to offer free 3G Skype-Skype mobile calls and instant messaging. For once, it's the yanks who were behind the curve.

Skype should have a big grin on its face in 2010. Since 2008, Skype mobile has offered fully fledged and beta services with a whole host of java-enabled connected devices - including Blackberry, Sony's PSP and now the Iphone. Verizon has dived straight in and where one US telco company goes, the rest are sure to follow. We guarantee an avalanche of VoIP 3G activity and business deal making in 2010. We'll have a better view later today of the liklihood of Skype making good on its projected forecast of one billion dollars revenue by 2011. µ