Verizon Expands Skype to Feature Phones

In its continuing quest to find differentiators in a crowded market, Verizon Wireless is reportedly bringing embedded, carrier-managed Skype to multimedia and feature phones sometime in the near future. However, like the Skype version it embeds on its smartphones, sources say it’s not VoIP. That decision is all part of a perhaps brilliant, perhaps misguided voice rvenue management strategy for the application long considered a formidable over-the-top competitor to wireless companies.

Verizon launched Skype for smartphones earlier this year, capitalizing on AT&T Inc.s refusal to open up the 3G network for Skype; a move AT&T has now remedied in the Skype for iPhone app. Yet Verizon has decided to try and hang onto traffic control (and voice minutes revenue) by running the service over its CDMA network as circuit-switched voice rather than packetized VoIP over 3G. So while the Verizon app does allow unlimited Skype-to-Skype calling and IM (with a voice plan of course), and discounted international rates, the carrier doesnt need to worry about toll bypass. Its a neat trick to be seen as open and VoIP-friendly, while not actually having to lose revenue.

“There will be opportunities for the mobile telecoms industry in the IP convergence/substitution market,” said In-Stat analyst Frank Dickson. ”By introducing fixed VoIP to cellular telephony and mobile VoIP to fixed telephony, operators will have the opportunities to grow on a unified voice and multimedia service experience. VoIP services are cheaper than circuit-switched services on traditional legacy networks. VoIP has diversified from purely voice implementation to a complete multimedia experience offering video calling, video conferencing, gaming and many other features.”

There are some downsides to Verizon’s approach, too. While making it a non-VoIP service affords Verizon the flexibility to give users of lower-end phones the Skype experience, it also limits where it can be used. Not being a VoIP application, it cannot, for instance, make use of Wi-Fia big differentiator for the over-the-top version of the service, like the iPhone app. It also is limited in functionality to voice and IM.

Verizon said it is expanding the application to 3G multimedia phones, and it will support Korean and simple Chinese, with an updated user interface. No word on which handsets will gain Skype nor when it will roll out.

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