Verizon Wireless to welcome rival Skype onto its smartphones

By Cecilia Kang
Washington Post Staff Writer
Wednesday, February 17, 2010; A09

Verizon Wireless said Tuesday that it would add Skype's Internet phone application to some of its smartphones, signaling a possible shift in the wireless industry's stance against allowing customers to use competing technologies on its networks.

The companies said in a joint news conference at the Mobile World Congress in Barcelona that starting in late March, Verizon's 90 million customers will be able to download the free voice and videoconferencing software program onto nine smartphones offered by the carrier, including the BlackBerry Curve and Motorola Droid.

With the application, a Verizon cellphone user could call a fellow Skype subscriber for free anywhere in the world. Calls to any non-Skype user would be counted against the user's voice minutes. The application will incorporate instant messaging, social networking tools and eventually videoconferencing, the companies said. To use the software, Verizon customers would need to have a voice and data plan.

Analysts said the move reflects the wireless industry's growing recognition that Internet data plans will provide a significant source of revenue as more consumers buy smartphones, surf the Web and download applications. Wireless companies will increasingly seek to distinguish themselves by offering applications they once feared would erode their main business -- traditional voice services.

"Voice dollars are coming down, and you are seeing more competition from prepaid minutes-use like from Boost," said Tole Hart, an independent wireless analyst. "So companies want to be able to show they have additional applications that are most desirable for people to use."

Skype, which was launched in 2003 and has 500 million subscribers worldwide, aspires to become the dominant communications platform for the Internet, be it over cellphones, television sets or computers. The company has been partnering with television makers -- and now a communications service provider -- to expand its service beyond the PC.

"Customers want a lot more from us. They want Skype everywhere and seamlessly integrated," said Josh Silverman, Skype's chief executive.

The companies said their agreement is exclusive and will extend to other parts of Verizon Communications' business, including its broadband and television service, FiOs. The executives did not discuss financial aspects of the deal, including how revenue would be shared from Skype calls.

The deal marks a sharp contrast to a years-long regulatory battle between the companies over so-called net-neutrality rules that would prevent carriers from blocking certain Internet applications on their networks.

As the Federal Communications Commission attempts to craft those rules, Verizon is fighting against what it describes as over-regulation. Skype continues to be among the most vocal corporate proponents of the rules.

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