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The top Voice over Internet Protocol (VoIP) service and a major traditional wireless operator become frenemies Tuesday when Skype releases its new application for the iPhone. While Internet phone services have long been seen as a low-cost threat to companies like AT&T (NYSE: T), analysts say built-in restrictions and the audience likely to use Skype on an iPhone shouldn't concern Apple's (Nasdaq: AAPL) wireless partner.
If you already have a Skype account, the new free iPhone app will let you make calls to other Skype users at no charge. Calls from Skype accounts to landline or cell phones will be charged at cheaper rates. Those calls won't be made on cellular networks; the Skype app will only be available via WiFi network. Also, some of the data-intensive features that computer-based Skype users -- especially those with small businesses -- have come to rely on, such as video and conference calls, won't be included in the deal. Very limited cellular service will allow online status checks and text chat.
The app can be used on a second-generation iPod touch, but you'll have to buy an additional headset and microphone. BlackBerry users will get their Skype app in May.
AT&T's Baby Step Into VoIP Waters
The iPhone doesn't allow multiple applications to run at the same time, so no Skype-dialing and Web surfing at the same time. Other than that, "it's a great expansion," mobile 
content analyst Jeff Orr of ABI Research told MacNewsWorld. "It doesn't go as far as what Skype has done with other platforms, such as Android, where they do allow calls to be made over a 3G network. But you can look at these and see some experimentation taking place. We'll see what risks are taken by the operator and possibly what changes they should embrace."
While it's obvious that AT&T and other wireless operators will force restrictions such as WiFi-only on Apple, Orr says the phone company should pay attention to see how much of a consumer pickup happens with Skype apps in order to possibly monetize features that would run on its data network. "This (app) doesn't try to take a stand necessarily against wireless operators, it doesn't try to force anybody's hand. This is a methodical approach to introducing Skype and Skype-type services," Orr said.
What about the fact that some voice calls that would be on AT&T's lines would end up going out on on a WiFi network? "The reason some might say it's not going to hurt AT&T is there's always the question of traffic and congestion effect on network quality of the signal -- it doesn't change how people would consume the voice business."
Dialing Up the Audience for Skype
International callers will benefit the most from the new Skype iPhone app, Orr, along with Gartner (NYSE: IT) analysts Ken Dulaney and Steve Blood, said. However, the two Gartner analysts still see potential obstacles for success.
"It's only really useful on international travel," Dulaney told MacNewsWorld. "The main difference here is that many users have more than enough minutes and don't gain anything by switching to Skype/WiFi. And remember, Skype isn't necessarily free if you want true Skype Out. And in some cases it may be more expensive. And if you are cost-conscious, you probably don't own an iPhone or a BlackBerry. It's too expensive for pre-pay-style users who would benefit." Many international calls are made via pre-paid cards and phones.
"WiFi access isn't free in Europe," Blood told MacNewsWorld. "In the majority of places you have to pay to access. For non-technical traveling workers this is not a trivial task, and for those that have WiFi accounts, you'll find the roaming costs can actually be higher than making a call using the mobile phone on a roaming tariff, such as Vodafone (NYSE: VOD) Passport.'
Blood also calls true VoIP over 3G networks "total hype," citing bad quality due to a channel that was not designed to carry voice and hidden costs issues. "Most data accounts have acceptable usage policies, and VoIP will eat into that very quickly."
Despite that, Blood believes the Skype app can give traveling workers the option for home/business calls for low or no cost depending on where they are located, "but we'd be advising clients caution when looking at the costs of enabling this, especially when traveling. The challenge is that the presence application could be useful, but again will be expensive when traveling outside data zones."
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