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WORLD: Skype’s iPhone application raises protests

by David GellesFinancial Times
April 3rd, 2009

Skype’s application for the Apple iPhone is igniting network neutrality disputes around the globe after less than a week on the market.

The issue is whether telecoms operators, which view Skype’s mobile offerings as a threat to their core business, can restrict usage of the iPhone application on their networks.

Free Press, a net neutrality advocacy organisation, on Friday asked the US Federal Communications Commission to investigate whether AT&T was violating US guidelines by preventing the application from running on its 3G network.

An alliance of internet groups on Friday responded to Deutsche Telekom and T-Mobile’s threat to block the Skype for iPhone application on its network.

The Voice on the Net coalition (Von), which includes Google, Microsoft and Intel, called on European regulators to ensure that consumers could access and run smartphone applications of their choosing on any public network.

To accommodate the boom in smartphone applications, telecoms operators have begun handling an increased flow of data on their networks, mostly without complaint.

But Craig Moffett, a telecoms analyst with Sanford Bernstein, said the Skype for iPhone application represented a threat to telecoms more ominous than overburdened networks.

“Where the rubber really meets the road is voice over IP,” Mr Moffett said. “You can talk the talk about opening your network, but opening it up to VoIP jeopardises your core business.” 

The Skype for iPhone application lets users make free calls to other Skype users and place calls to landlines and other mobile phones at a low rate. Telecom operators fear that a dramatic increase in mobile Skype usage could eat into their revenues from minutes.

Net neutrality advocates argue that blocking selective applications is disadvantageous to consumers and stifles innovation. “Blocking of voice applications on mobile devices, such as the announcement of T-Mobile to block Skype on iPhones in Germany, is highly detrimental for consumer welfare in Europe,” Von said in a statement on Friday.

In its complaint to the FCC, Free Press cited a comment made by AT&T’s senior public policy executive, Jim Cicconi, that it says is essentially an admission of anti-competitive behaviour. “We absolutely expect our vendors not to facilitate the services of our competitors,” Mr Cicconi told USA Today.

Free Press policy council Chris Riley said such behaviour was out of line with the FCC’s 2005 internet policy statement, which encouraged network operators to allow consumers equal access to any application.

Blocking the Skype application “is setting a dangerous precedent”, said Mr Riley. “We don’t believe wireless carriers should be able to decide what users can and can’t do.”

Although endorsed by the FCC, the policy statement is not law, and as such is not enforceable. However, net neutrality advocates believe the administration of President Barack Obama could be more sympathetic to their concerns.

“Obama’s technology policy since the early days of his campaign has started with net neutrality,” Mr Riley said.

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