Call China On Your iPhone For Nothing

Skype, the Web Phone Giant, Brings Cheap Calls to Cellular

By BRAD STONE
Published: March 29, 2009 (New York Times)

SAN FRANCISCO — Skype, the Internet calling service that has more than 400 million users around the world, is aggressively moving onto mobile phones.

The Luxembourg-based company, a division of eBay, plans to announce on Tuesday that it will make its free software available immediately for Apple’s iPhone and iPod Touch and, beginning in May, for various BlackBerry phones, made by Research in Motion.

Other companies have already made software for those phones that works with Skype, but it does not offer all of the service’s features.

As with Skype on the computer, users of Skype on mobile phones can make calls and send instant messages to other Skype users free, and they pay lower rates than the phone companies would charge when they use Skype to call landlines or other mobile phones.

This year, Skype announced versions of its software for Nokia phones and phones running Microsoft’s Windows Mobile and Google’s Android operating systems.

Apple will limit Skype’s use on the iPhone somewhat, allowing Skype calls to be made only when the device is connected to local Wi-Fi networks, and not allowing Skype calls over the data networks of its carrier partners like AT&T. Apple imposes the same restrictions on all voice applications in its App Store.

The idea of bringing Skype to mobile phones has always been viewed by cellular operators as potentially threatening. It opens up the possibility that people will use their data plans to make calls using Skype, instead of the more expensive and profitable voice minutes on the carriers’ cellular networks.

“The carriers are in the business of selling voice minutes. For a long time they saw products like Skype coming along and they were concerned,” said Ben Wood, director of Research at the London-based CCS Insight, a market research firm. “But it turned out a little bit different than they expected.”

Mr. Wood said many carriers had modified their views about so-called voice-over-Internet-protocol, or VoIP, services. In some cases, Skype has proved to be appealing to consumers and a competitive advantage for a carrier over its rivals.

Skype tested its service in London in the last two years with Hutchison 3, a British mobile network. It said it drew more customers to Hutchison 3 and increased its revenue for each user, since people were making calls on their cellphones using Skype that high calling rates would have discouraged otherwise.

Scott Durchslag, Skype’s chief operating officer, said he did not think the limitations on using Skype on the iPhone would be a big drawback for users, since Wi-Fi networks have become common.

However, he said he hoped Apple and AT&T would relax restrictions and let people make Skype calls anywhere they roamed. “We think these things should work on any device, any network, at any time,” he said.