Skype on iPhone may signal end of voice plans

The death of cellphone voice plansmay beon the horizon as internet calling service Skype will soon be available over iPhone cellular connections.

David Ponsford, head of Skype's iPhone team, said in a video released on Wednesday that the company was working on a calling service that will deliver "CD-quality sound" on the iPhone. Users will be able to make free Skype-to-Skype calls or use the paid SkypeOut service that lets them phone landlines and mobiles at significantly cheaper rates. SkypeOut offers unlimited calling within North America, for example, for about $40 a year.

Skype also offers phone numbers in 25 countries, not including Canada, which allows users to accept incoming calls. For about $60 a year, the user can sign up for an internet-based phone number that then forwards incoming calls to themvia Skype.

Skype will release the app globally "real soon,"Ponsford said, once it perfects a call quality indicator that will tell the user what sort of connection they can expect to get over their 3G connection.

The feature is already available on a number of Nokia phones and Windows Mobile devices, but the iPhone is by far the most popular and widely used Skype-capable smartphone available. Apple does not report iPhone numbers but some estimates suggest there are at least 25 million users worldwide.

Skype'snew capability comes as the result of a change in the developer software that Apple distributes to individuals and organizations that design apps for its device. Under the previous rules, Apple did not allow app developers to design calling services that used the device's 3G internet connection. Developers such as Skype were still able tocreate such services, but they could only use the iPhone's Wi-Fi internet connection.

The restriction was put in place under pressure from cellphone carriers, who wanted to preventcustomers from ditching their voice plans and using their phone's data connection to make voice calls with Skype or other similar apps, such as iCall.

Following increased anti-competitive scrutiny from U.S. regulators last year, AT&T the iPhone's sole U.S. distributor in October promised to remove the restriction. The company finally followed up last week, clearing the way for customers to get rid of their voice plan subscriptions in favour of just a data plan. Apple and AT&T last week also announced that people who buy the upcoming iPad tablet computer will be able to get data-only plans.

Skype warned, however, that while its 3G-enabled app will be made available globally, cellphone carriers may still choose to restrict the service. Apple is requiring Skype and other internet calling services to warn customers that their cellular provider may prohibit use of such features.

Bell, Telus to allow it

Bell and Telus, which started selling the iPhone in November, said they willnot blockSkype over 3G and allow customers to use it. But both companies said iPhone customers will still be required to subscribe to a voice plan. Rogers, which has been selling the iPhone since mid-2008, did not respond to several inquiries.

New cellphone carrier Wind Mobile, which does not offer the iPhone, also said it does not allow customers to sign up for data-only plans.

Technology analyst Rob Enderle, of the Enderle Group in California, saidthe death of the voice plan is inevitable. Governments and regulators may either eventually force carriers into offering data-only plans, or competitive forces will go to work.

"Carriers are going to resist it as long as possible and that's going to drag it on," he said. "Government could say, 'this is a much better way to do things,' or a smaller carrier could use this asa shoehorn to get into the market."

Iain Grant, a telecommunications consultant at the SeaBoard Group in Montreal,said the disruptive influence of servicessuch asSkype may be dulled in Canada somewhat by the increased competition resulting from new wireless companies such as Wind and Mobilicity. Wind is already offering cheap unlimited voiceplanswhile Mobilicity this week said it intends to do the same when it launches in the spring.

"Many of the things that used to drive Skype might actually be lesscompelling drivers in the world of unlimited," he said.

The original Wi-Fi-only Skype app launched around the world in March last year, but wasn't released in Canada until September. Skype blamed the late Canadian release on licensing issues related to how the service plays sounds.

Cellphone carriers in other parts of the world have also been quicker to embrace Skype. Wireless operator 3, in the United Kingdom, has offered a dedicated Skype cellphone for several years. Customers only pay for a data connection and make all their calls using Skype.