Verizon Wireless's Skype Deal Doesn't Look So Exclusive Now


Less than four months ago, Verizon Wireless (VZ) touted its exclusive 3G partnership with Skype. The plans were big: Verizon would offer Skype's Internet phone service and software on its 3G smartphones. But Verizon may find this deal comes with static.

Earlier this week, Skype announced it created an iPhone 3G application, and as all iPhone-watchers know, AT&T (T) is the exclusive U.S. carrier for the hot handset. As a result, Skype is now showing up on the AT&T network via Apple's (AAPL) 3G iPhone -- and AT&T is Verizon's chief rival. This puts a damper on Verizon's 3G exclusivity with Skype.

Skype, however, notes consumers will receive different capabilities under the Verizon 3G deal. In a company statement, Skype says:

The Skype experience that Verizon Wireless consumers have is unique because Skype is fully integrated and always on. By working together with Verizon, Skype was able to improve the battery life by optimizing the Skype mobile™ application for use on devices connected to Verizon's network. And, since the application is always on, you can leave it running in the background while accessing other phone functions or applications. Also, the Skype mobile experience has been integrated into the way people use their mobile phones. So, if you're making a call overseas using your phone's native phone dialer, it brings up an option asking if you want to connect the call over Skype, thus saving you lots of money instead of paying regular rates.

"Doesn't Change Anything"?

It's too early to tell whether a price hike would dissuade a potential customer from entering into a multiyear contract with Verizon to acquire a Skype-enabled smartphone. It also remains unclear whether customers acquiring such a smartphone under a two-year contract would be able to extend the now-free Skype-to-Skype service for the duration of the contract or if a contract would allow the price hike to pass through to the user.

"I can only speak to what we have now," says Debra Lewis, a Verizon spokeswoman. As to Verizon's exclusive deal with Skype and the Internet phone-service provider's recent iPhone announcement, Lewis says the carrier is happy with its arrangements with Skype and that the iPhone app "doesn't change anything." A Skype representative wasn't immediately available for comment.

Skype currently offers a premium service that allows its users to call non-Skype customers on their cell phones or landlines. The cost can run between 2 cents a minute under a prepaid plan to $1.08 per month under a subscription plan. Internet phones are widely viewed as a cheaper alternative to rates charged by traditional phone companies. Given the announcement on June 2 that AT&T is ending its unlimited smartphone data plan, the issue of pricing on these devices seems to be getting increasingly hot.