Why AT&T and Apple Are Handcuffing Skype Users

If you've been an InfoWorld reader for more than two years or so, you no doubt remember that we used to be a magazine. Now we're online-only and doing rather well, thank you. But it's been a wrenching change, and many other publications, particularly newspapers, have not done nearly as well.

The Internet is a source of what historian Joseph Schumpeter called creative destruction, bringing with it enormous benefits along with the collapse of old business models. And now that wireless technology is well on the road to convergence with the Internet, even more business models are being challenged. Indeed, the technology itself is being pushed as consumers and businesses demand ever more complex services.

Which brings us to the latest episode of this story: Skype versus AT&T and Apple, a duopoly I like to call Ma iPhone. Since Skype put its app on the App Store, more than 2 million downloads have been recorded because people want to make cheap Skype calls with their iPhones. Go right ahead, says Ma iPhone, but you can only make those calls via Wi-Fi, not 3G. (Apple implemented the policy at AT&T's behest.)

[ Read how Skype is diving deeper into business phone market. ]

The high-speed Skype ban has touched off a wave of protests, including calls for Congress and the FCC to get involved, if not directly, via regulation that would clarify the issue of Net neutrality and wireless services once and for all. It's an important debate that speaks to issues that we in the IT community should be thinking about.

As you may have guessed, I'm on the side of the consumer. I don't buy Ma iPhone's arguments that it can't afford to give Skype, which it considers a competitor, a leg up. And I don't believe the claim made by pro-corporate bloggers that the iSkype would be a bandwidth-hogging problem child.

Just whose network is it?
Ma iPhone's argument was well summed up during an interview with USA Today. Jim Cicconi, AT&T's top public policy executive, says AT&T has "every right" not to promote the services of a wireless rival. "We absolutely expect our vendors" -- Apple, in this case -- "not to facilitate the services of our competitors," he says. "Skype is a competitor, just like Verizon or Sprint or T-Mobile," he says, adding, Skype "has no obligation to market AT&T services. Why should the reverse be true?"

On the surface, the argument has some appeal. Why help a competitor? But we're not talking about a widget maker. There is a well-established set of legal and regulatory principles regulating telecommunications networks. They must be open. AT&T can't pick and choose what services customers can use on their landlines. And it appears that the law also leans in the direction of opening the less-regulated wireless networks. "Telecommunications networks are there to provide access for everybody. If not, they [the carriers] are breaking the bargain inherent to communications," says Chris Riley, policy counsel of Free Press, a nonpartisian advocacy group that is pushing the FCC to act.

"Wireless broadband networks cannot become a safe haven for discrimination," he says. "The Internet in your pocket should be just as free and open as the Internet in your home. The FCC must make it crystal clear that a closed Internet will not be tolerated on any platform."

AT&T argues that it can't afford to deliver services to a competitor. I don't believe it. There's a lot more money to be made selling wireless services than there is in the moribund landline business. Just as InfoWorld had to change its model to live in the age of digital publishing, AT&T has to accept that its business model has to change. Like it or not, the old ways of doing business no longer work.

There's plenty of bandwidth
Riley, who sports a doctorate in computer science as well as a law degree, makes short work of the argument that Skype calls will slow down the network. "VoIP calls are low-latency, but also relatively low in bandwidth usage," he says. Indeed, AT&T, unlike some in the blogosphere, doesn't even make that bandwidth argument about Skype. But it has made the bandwidth argument about streaming video services. Several weeks ago, AT&T briefly changed its terms of service to ban certain third-party streaming video from the iPhone. It quickly backed off that position, but it's worth nothing that -- while claiming streaming movies, television programs, and so on would clog the network -- the company continued to offer similar services over the same network. It even has a YouTube button on the iPhone, notes Riley. "AT&T wants to have its cake and eat it, too," he says.

I don't mean to argue that the bandwidth is unlimited. There are real issues here, and I'd encourage you to read a special report InfoWorld published on the subject late last year. Still, I think Ma iPhone is way off base in its treatment of Skype, and I urge you to defend the principle of Net neutrality, whether it be wired or wireless. But don't do so in a knee-jerk way: The destruction of business models by new technology is of great importance to those of us who make our living in media and information technology, and I'd urge you to give it real thought.

I welcome your comments, tips, and suggestions. Reach me at bill.snyder@infoworld.com.

For comprehensive coverage of the Android ecosystem, visit Greenbot.com.

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