AT&T allows Internet voice calls on iPhone

Reuters

WASHINGTON - AT&T Inc will open its third-generation wireless network to third-party Internet voice applications on Apple Inc's iPhone, clearing the way for services such as Skype.

AT&T, which has exclusive rights to the iPhone, said in a statement that the company informed Apple and the U.S. Federal Communications Commission of its decision, which was in response to a regulatory inquiry into the wireless industry.

"Today's decision was made after evaluating our customers' expectations and use of the device compared to dozens of others we offer," said Ralph de la Vega, head of AT&T Mobility & Consumer Markets.

The move allows Skype, owned by eBay Inc, to file an application with Apple, which would then review it and decide whether to approve the app for its iPhone.

Apple praised AT&T's move and said it would move swiftly to make voice over Internet protocol (VoIP) apps available on the iPhone

"We are very happy that AT&T is now supporting VoIP applications," Apple spokeswoman Natalie Kerris said. "We will be amending our developer agreements to get VoIP apps on the App Store and in customers' hands as soon as possible."

Apple had previously not made Google Inc's Voice application available for downloading on its iPhone. The two companies have bickered in recent statements to the FCC about why Google's Voice application is not available on the iPhone.

Google said Apple rejected it. But Apple said it is still studying it because the application alters the iPhone's telephone functionality and user interface.

AT&T's action, which is a reversal from a previous position to ban such calls on its 3G network due to revenue concerns, does not affect the Google Voice app spat.

The FCC, which has launched an inquiry into the state of competition, innovation and investment in the wireless industry, welcomed the move.

"When AT&T indicated, in response to the FCC's inquiry, that it would take another look at permitting VoIP on its 3G network I was encouraged," FCC Chairman Julius Genachowski said in a statement.

"I commend AT&T's decision to open its network to VoIP. Opening wireless services to greater consumer choice will drive investment and innovation in the mobile marketplace," he said.

On October 22 the FCC is expected to propose a Net neutrality rule aimed at ensuring that network operators like AT&T and Verizon treat the flow of Internet content and applications without discrimination.

But the move by AT&T is not likely to deter the FCC from going ahead with the Net neutrality rule.

"We believe the announcement is good news for Skype and other VoIP providers, and it also improves AT&T's political and rhetorical position as the FCC attempts to write network neutrality rules, including for wireless broadband providers," Stifel Nicolaus analyst David Kaut said.

"AT&T's announcement should remove one likely thorn with regulators, but does not, in our view, halt the movement toward applying Net neutrality to wireless," Kaut said.

The move was made the same day Verizon Wireless announced it will sell two mobile phones with Google's Android operating system this year, part of a partnership that could boost Google's efforts to challenge Apple in the fast-growing smartphone market.

The first Android phones from Verizon Wireless, a venture of Verizon Communications Inc and Vodafone Group Plc, will support the Google Voice software application -- allowing consumers to make low-priced international calls and which Apple had yet to approve for its iPhone.

Skype President Josh Silverman called AT&T's move the "right step" but cautioned that government actions are still needed to maintain an open Internet. Skype's application has been downloaded on 10 percent of all iPhone and iPod Touch devices, where it previously could be used over Wi-Fi, but not AT&T's 3G network.

"Nonetheless, the positive actions of one company are no substitute for a government policy that protects openness and benefits consumers," Silverman said.