February 16, 2010, 2:10 PM — Skype on Verizon Wireless changes everything.
In the US, the cell phone marketplace is fractured. This is because there are two (there were three) competing radio types, CDMA and GSM. The entire rest of the world, save parts of Southeast Asia, uses GSM. Carriers in the US started with a model of base + minutes + long distance + roaming + equipment rental (or outfit purchase). This equation mirrored landline telephony plus gouging charges that were historical as at one time there were more than two dozen cell carriers (and not just branding operations).
Skype on Verizon subverts the concept that long distance charges by wireless carriers are meaningful. Skype is a voice-over-IP (VoIP) app that connects voice conversations for either no cost, or a nominal two euro cents/minute charge. Skype software also supports video conferencing, text/IM, SMS, and has other interesting features. The app is free, but Verizon will charge a $35 activation fee. Then customers will pay Skype a nominal charge for calls made to landlines, international calls, and other non-Skype users. Only seven phones are initially supported, five of them Blackberries, one HTC (the Droid Eris), and Motorola Droid. Others may or may not be compatible.
Data subscribers to Verizon that tether their machines via Verizon Wireless have been able to use Skype subject to the connect speed and connection latency of Verizon's EV.DO and 1xRTT data networks. Personal anecdotal experience says Skype is usually fine to use over the EV network, but has difficulties with 1x networks.
Will Verizon lose international toll revenue? Unlikely. People went to pains to avoid Verizon Wireless' rather expensive long distance charges. Worse, 'world phones' that Verizon markets don't compete well with GSM phones from the US -- when used abroad. People have gone to great pains to use other methods of international long distance methods, rather than use Verizon Wireless' costly international toll charges. As an example, I have a Verizon phone as well as a Sony Ericsson GSM phone -- and the Sony Ericsson phone is used on my trips to the EU, exclusively.
I wondered if Verizon, who recently exclaimed that their wireless network would become a transport for other apps was in fact lying. Apparently not, is the answer. I'll be less skeptical now. Just a little.