AT&T to expand Internet calling services on iPhone

[October 07, 2009]  WASHINGTON (AP) -- AT&T Inc. said late Tuesday that it will begin allowing iPhone owners to use Internet calling services on its wireless network.

The phone giant, the exclusive wireless provider for Apple Inc.'s iPhone, has until now allowed Internet calling services to work on the popular device only over Wi-Fi connections. Those connections generally have limited mobility and therefore present less of a competitive threat to AT&T's core wireless calling business.

The move comes two months after the Federal Communications Commission sent letters to AT&T, Apple and Google Inc. asking why the Google Voice messaging and calling application has not been approved for use on the iPhone.

It also comes amid an FCC inquiry into competition in the wireless industry. Among other things, that inquiry will examine handset exclusivity deals, such as AT&T's agreement with Apple giving AT&T exclusive access to the iPhone.

In addition, the FCC is scheduled to vote later this month on "network neutrality" rules, which would prohibit broadband providers from favoring or discriminating against certain types of Internet traffic flowing over their lines.

FCC Chairman Julius Genachowski, one of three Democrats on the commission, wants to impose net neutrality rules to ensure that broadband providers don't abuse their power over Internet access to favor their own services or harm competitors.

His plan faces stiff opposition from the phone and cable companies that provide most broadband connections in the U.S. and has particularly alarmed wireless carriers because it would also apply these rules to wireless networks.

AT&T said late Tuesday that it has informed Apple and the FCC that it has taken the necessary steps to enable Voice over Internet Protocol -- or VoIP -- services on the iPhone over its 3G wireless network. AT&T said it made the decision "after evaluating our customers' expectations and use of the device compared to dozens of others we offer."

The company already allows subscribers to make Internet calls over its 3G network using other wireless devices.

Apple welcomed the announcement and said it will amend its developer agreements to get VoIP applications on the App Store as soon as possible.

Genachowski also praised AT&T's move. "I commend AT&T's decision to open its network to VoIP," Genachowski said in a statement. "Opening wireless services to greater consumer choice will drive investment and innovation in the mobile marketplace."

Josh Silverman, president of Skype, a leading provider of Internet calling services, echoed that sentiment.

"Our customers are extremely interested in taking Skype conversations with them on the go on the iPhone," Silverman said in a statement. "We applaud today's announcement by AT&T to open up its 3G network to Internet calling applications such as Skype. It is the right step for AT&T, Apple, millions of mobile Skypers and the Internet itself."

Referring to the upcoming net neutrality vote, however, he added that "the positive actions of one company are no substitute for a government policy that protects openness and benefits consumers."

The FCC has already signaled that it is playing particularly close attention to the iPhone, inquiring earlier this summer as to why Google Voice hadn't been approved for use on the device.

Google Voice lets people sign up for a new phone number, then route incoming calls out to cell, office or home phones. It also lets users place calls, including international calls at low rates, from within the application. Although iPhone owners can still use a Web browser version of Google Voice, its features are limited.

In its response to the FCC, Apple said it has thus far blocked the Google Voice program from running on the iPhone because it duplicates some of the iPhone's built-in features, but added that it is still studying the application.

For its part, AT&T said the decision was made entirely by Apple. It also revealed, however, that under its agreement with Apple, Apple cannot enable any Internet calling applications that use AT&T's 3G network without AT&T's permission.

But now that it is under the FCC microscope, AT&T appears to be reversing course. That has led some skeptics to question the company's motives.

Art Brodsky, a spokesman for the public interest group Public Knowledge, suggested that AT&T's latest actions are simply an attempt to head off net neutrality obligations.

"It's too convenient that AT&T announced it had changed its mind just 16 days before the FCC is due to vote on proposing wireless rules preventing discrimination," he said.

Meanwhile, with federal regulations looming, the company has gone on the offensive, attacking at least one big supporter of net neutrality: Google.

Last month, AT&T sent a letter to the FCC complaining that Google Voice has an unfair advantage since it blocks calls to rural communities where local carriers charge high connection fees even as regulations prevent AT&T from blocking such calls.

[Associated Press; By JOELLE TESSLER]

AP Technology Writer Jessica Mintz in Seattle contributed to this story.

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