Cell phone war! AT&T about-face on Web calls follows Verizon-Google pact

Just hours after Verizon Wireless (VZ) announced a major deal Tuesday to sell new phones equipped with Google's (GOOG) Android mobile operating system, its arch-rival AT&T (T) said it would reverse its restrictions on voice-over-Internet calls. Apple iPhone users will now be able to use Internet-calling applications like Skype on AT&T's data network, in addition to making calls using Wi-Fi networks.

AT&T's move comes on the eve of the annual wireless industry conference amid a flurry of action in the mobile space. It represents a major reversal for the mobile giant, which is under Federal Communications Commission scrutiny for its role in Apple's decision to restrict the Google Voice application from its app store.