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AT&T Changes Policy to Let Network Carry EBay’s Skype (Update3)

By Todd Shields and Connie Guglielmo

Oct. 7 (Bloomberg) -- AT&T Inc., in a policy reversal, will let iPhone customers use Internet phone services such as EBay Inc.’s Skype on the same airwaves as standard wireless calls.

The move will make cheap calls over the Web more convenient for iPhone customers, who have been able to use such services only when they’re within reach of wireless Internet signals. AT&T said in a statement yesterday that it “has taken the steps necessary” so Apple Inc., maker of the iPhone, can enable the voice-over-Internet applications to run on the wireless network.

AT&T, the second-largest U.S. mobile telephone company, is under pressure from a Federal Communications Commission inquiry into competition in the wireless industry. The company told the FCC Aug. 21 that it hasn’t allowed voice-over-Internet calling on the iPhone over its third-generation, or 3G, network, in part to guard against losing revenue to the services.

“We applaud today’s announcement,” Josh Silverman, chief executive officer of Skype, said in a statement yesterday. He said customers have downloaded and installed Skype on 10 percent of all iPhone and iPod Touch devices, which “clearly demonstrates that our customers are extremely interested in taking Skype conversations with them on the go on the iPhone.”

Apple will enable the calling method “as soon as possible,” Natalie Kerris, an company spokeswoman, said in an interview.

‘Open Internet’

FCC Chairman Julius Genachowski said today that AT&T’s move doesn’t end the need for “net neutrality” rules he has proposed to make sure Internet service companies give fair treatment to traffic from all legal content providers.

“We were pleased that AT&T made the announcement it did yesterday,” Genachowski said in a Bloomberg Television interview. “This is one company addressing one service in a voluntary way. It doesn’t in any way reduce the need for fair and sensible rules of the road that preserve a free and open Internet on an ongoing basis.”

The FCC is investigating whether consumers are harmed by exclusive handset deals like the one tying the iPhone to AT&T. The agency also is probing why Apple didn’t accept Google Inc.’s voice application for the iPhone.

Google Voice lets customers use one phone number to get calls on multiple devices and to access voice mail. Apple told the FCC in an Aug. 21 letter that it’s still considering the application. Google Voice wasn’t part of yesterday’s announcement by AT&T.

Dallas-based AT&T has told the FCC it had no role in the decision on Google Voice for the iPhone. It said users can still access the Google program on their phones via the Web.

Skype’s Users

Skype, which has more than 480 million users, is being sold by San Jose, California-based EBay.

AT&T fell 56 cents, or 2.1 percent, to $26.18 at 4:01 p.m. in New York Stock Exchange composite trading. Apple, based in Cupertino, California, gained 24 cents to $190.25 on the Nasdaq Stock Market, and Google climbed $18.80, or 3.8 percent, to $517.54.

Also yesterday, Verizon Wireless, the largest U.S. mobile phone company, said it will develop devices based on Google’s Android operating system, aiming to challenge the iPhone. The iPhone 3G and Research In Motion Ltd.’s BlackBerry Curve were the top-selling smart phones in the second quarter, according to researcher NPD Group Inc.

Google and Basking Ridge, New Jersey-based Verizon Wireless will work on several Android devices together that will include programs from both companies, they said in a statement.

Google, based in Mountain View, California, started Android in 2007 as part of an effort to create free software for phones. Programmers can develop games and other applications for Android devices.

To contact the reporters on this story: Todd Shields in Washington at tshields3@bloomberg.net; Connie Guglielmo in San Francisco at cguglielmo1@bloomberg.net

Last Updated: October 7, 2009 16:26 EDT

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