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Summary:

Skype and Verizon this week announced a partnership that would embed the Internet calling service on Verizon’s smartphones. The question on my mind was: Is this deal exclusive? And when executives refused to share details, I did some digging. Here are some new details.

Skype and Verizon announced a partnership earlier this week that would embed the Internet calling service on Verizon’s smartphones. The partnership, at least to me, was driven by Verizon’s fear of the iPhone.

I wondered if the two companies had signed an exclusive deal. But during the press conference, when I asked Verizon chief marketing officer John Stratton and Skype CEO Josh Silverman about the deal, they both dodged the question. Then later during a conversation with Silverman, when I asked if his company would work with another carrier in the U.S. building a solution similar to the one being offered to Verizon’s customers, he declined to answer the question.  “I cannot comment and speculate on this,” is what he said.

Their evasiveness, got me — like many of our readers — even more curious about the deal. I have been making calls to my sources and have picked up some interesting (though no means all) details.  The deal, my sources tell me, is an exclusive partnership between the two that will last for a period of 2-3 years. No other U.S. carrier is going to get a similar Skype offering – which also bolsters my theory that Skype can help Verizon distinguish itself amongst smartphone offerings, especially the iPhone.

Another thing I also picked up: Skype’s iPhone app for 3G is ready to go, but the company is holding it back, mostly because it’s worried about the AT&T network. Silverman recently told me that the company would release a Skype upgrade “very soon.” I wonder how much of the delay is caused by the influence wielded by their friends at Verizon.

By Om Malik

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  1. OM, Skype’s app for SkypeOut calls was available at least a year ago for Windows phones on SPRINT. The app lets you make calls using cellular / WiFi connection. There is this ECHO issue that bothered be during the calls so I canceled the subscription. I hope the current APP works well.

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  2. [...] US carriers, but they dodged the question. They can evade but they cannot hide I suppose – Malik tapped some of his own sources who had some VERY interesting things to say about the new [...]

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  3. [...] US carriers, but they dodged the question. They can evade but they cannot hide I suppose – Malik tapped some of his own sources who had some VERY interesting things to say about the new [...]

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  4. OK, thanks – now who is paying whom in this deal? Is Verizon getting a cut of Skype Out revenues, or other fees originated through Verizon phones? iPhone fear is a bit amorphous – where’s the meat of this deal?

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  5. Good info! Thank’s for the competitor :)

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  6. [...] US carriers, but they dodged the question. They can evade but they cannot hide I suppose – Malik tapped some of his own sources who had some VERY interesting things to say about the new [...]

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  7. [...] US carriers, but they dodged the question. They can evade but they cannot hide I suppose – Malik tapped some of his own sources who had some VERY interesting things to say about the new [...]

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  8. Om, I think you have that all wrong. I think Verizon locked Skype into an agreement (notably without the participation of Vodafone, the world’s largest mobile telecommunications company, and owner of 50% of Verizon Wireless) because of the relentless Google onslaught. Google Voice is available on Android phones, and on Blackberrys, widely, carrier independent, able to use 3G, WiFi and UMA. Google appears to have marketing arrangements with T-Mobile as well, a wholly owned subsidiary of the fourth or fifth largest telecommunications company on the planet. I cannot imagine that any carrier would competitively be concerned about the iPhone, which can only be adopted in a complicated marketing arrangement with the manufacturer, is shackled to iTunes, and for which an entry level model does not exist.

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  9. I am a bit confused on the significance of the VZW/Skype relationship. I agree that VZW wants (needs) to get on the 3G train before it has competely left the station. But if Skype is releasing an iPhone 3G app, then does VZW embedding the Sype app really achieve much in distinguishing VZW’s offerings?

    Maybe it would be a bit easier to make a call on a VZW phone. But I can’t see someone opting to buy a Blackberry Storm over an iPhone to get this feature.

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  10. Om,
    Confused here. In what way is it exclusive if Skype over 3g on AT&T is a go ?

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  11. Here is my hypothesis about why Verizon is willing to do the Skype deal. Most Verizon Wireless users have an unlimited voice and data plan. Verizon’s voice is digital anyway. So what’s the difference to Verizon’s underlying infrastructure whether you use Skype or Verizon Voice?

    I would bet that Skype uses fewer bits than Verizon Voice. So it may actually be the case that Skype to Skype calls use less resources than the same call using Verizon voice to Verizon voice.

    Your thoughts?

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  12. Seems to me this deal is more about the international use issue verizon has with CDMA tech platform (CDMA is not prevalent in places like western Europe, Caribbean, south america, etc). This deal lets any VZN wifi-enabled phone have a built in international calling solution. This removes the “I travel abroad, therefore I need ATT or TMOB” reason to NOT use verizon wireless. Aside from not having the iPhone and other sexy hardware, this was the only weakness left in verizon’s offering to all the folks dying to get off ATTs crappy service. The VZN nexus one is looking better and better…

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  13. I have to agree with you Skip. I’m a Sprint customer and I use a Skype client on my Blackberry Curve when I’m traveling internationally. It works pretty well through WiFi. It also keeps me from having to either by an unlocked phone, buy a prepaid phone or use phone cards.

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  14. any word on a skype client on the palm pre devices???

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    1. Not happening any time soon. Josh you are the only one who is still a Palm loyalist :-)

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      1. that’s too bad. webOS has to be the slickest of the current crop of mobile OSes. unfortunately, part of the problem is palm though. the current SDK doesn’t even support microphone access.

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      2. Hello GigaOM and the rest of the group… I’m a former PalmOS software developer (2001-2007), and been using Skype since 2005, before eBay bought them out. I never liked Verizon, though their callcenters are nearby me.

        As a former PalmOS software developer, many people had asked me about creating a Skype app for Palm Pre. The problem is, I’m in Philippines and Palm Pre isn’t sold here.

        Kuya Marc

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      3. It’s really sad to see what’s happening with Palm. I really expected great things when the Pre was released.

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  15. [...] riportato dai ragazzi di GigaOm arriva dagli USA un rumor che vede come protagonisti Skype e [...]

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  16. [...] riportato dai ragazzi di GigaOm arriva dagli USA un rumor che vede come protagonisti Skype e [...]

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  17. [...] was trying to do some digging and ran across this article by Om Malik detailing some more information he managed to get from his sources. It looks like this [...]

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  18. [...] with special features, but that doesn’t seem to be the case. According to a post over at GigaOM, there’s more to this exclusivity [...]

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  19. [...] ein neues Gerücht, seitdem weitere Infos zum Skype-Verizon Deal aufgetaucht sind. Der Tech-Blog gigaom.com schreibt u.a. folgendes: The deal, my sources tell me, is an exclusive partnership between the two [...]

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  20. [...] on them. Skype still hasn’t been enabled to work over 3G (some speculate this is due to the Verizon deal). My3G takes care of all of this. By enabling it on an app, that app is made to think it is on [...]

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  21. [...] Note that Skype Lite for mobiles — and I assume Android since I haven’t seen it in the Android Market for some time — is also on the disabled list, and that actually does surprise me. This client geared for Java-based phones only debuted about a year ago. Perhaps Skype is changing focus and evolving their business model — instead of targeting device platforms and end-users, maybe we’ll see more deals with carriers like the recent one with Verizon. [...]

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  22. [...] outlets rejoice at the "openness" Verizon wireless is finally showing,  it turns out to be a limited, crippled version, which is designed to fit Verizon’s agenda, NOT customer [...]

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  23. [...] I had outlined previously, the current Skype-on-Verizon deal is an exclusive between the two companies, though both of them are dodging answering this question. The Skype on the iPhone still [...]

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  24. Will Skype be releasing an iPhone 3G app soon, like the Skype-Verizon Deal. I have an Iphone/At&t, but im thinking of going with Verizon because of the Skype app, my girlfriend is in western Europe and the WiFi is getting old… 3G network sounds great…
    Any feed back would be great…

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  25. I think Both Verizon and Skype are looking for some publicity and that’s why they are backing each other up. Of course there is a cost for business relationship. Common scene if Skype is going to use Verizon’s network to make money then they will have to cut a pay check to Verizon. Also Skype is still an unknown player in the US market, they need a partner like Verizon.

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  26. [...] you’re running into the Verizon-Skype exclusive. Nexus One is only available from T-Mobile so no Skype mobile (at least the voice parts) for you. [...]

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  27. [...] over 3G, which tells me they are using a solution very similar to the one they cobbled together for Skype-over-Verizon. For an alternate explanation, check out Andy Abramson’s post who thinks the magic is [...]

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  28. [...] lies in between the two company statements, Skype does have a history of claiming openness while some of its actions dictate otherwise. Perhaps the best example is that of Skype Mobile for Android handsets. Instead of fully supporting [...]

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  29. [...] Skype’s revenues are only going to accelerate as the company’s deals with folks like Verizon Wireless and television makers such as Samsung and LG start paying [...]

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  30. [...] beginning to move to Android, but developers need to be wary of exclusivity deals with carriers, as Skype has with Verizon[1]. Similarly, manufacturers need to make sure they don’t shoot themselves in the foot by adding [...]

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  31. [...] As more consumers cut the landline cord, cellular calls in the home become important, a trend sure to be a hot topic at our Mobilize event later this week. For a carrier like T-Mobile that doesn’t have the largest coverage footprint, this trend towards a cell-phone-only society can put the company at a disadvantage: if customers don’t have good T-Mobile coverage at home, they won’t be apt to pick T-Mobile for service on that single handset. Skype calls over Wi-Fi aren’t even an option for T-Mobile since Skype for Android is limited in the U.S. to handsets on the Verizon Wireless network exclusively. [...]

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  32. [...] been available on Android phones from other U.S. carriers. Initially, my colleague Om Malik feared the Verizon deal was engineered by the carrier to combat the iPhone and would prevent other carriers from getting [...]

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  33. [...] If its deal with Verizon Wireless was merely an indication of Luxembourg-based Skype’s true intentions to closely partner with large cellular providers and find future growth, then today that became clear-as-a-day. The company announced that it is signing up KDDI, a Japanese phone company, which will integrate Skype into some of its handsets. Recent ResearchMobile Overview, Q2 2010 Green IT Overview, Q2 2010 Infrastructure Overview, Q2 2010 Connected Consumer Market Overview, Q2 2010  [...]

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  34. [...] in the past. The company also supports BlackBerry devices and other Android phones through a relationship with Verizon Wireless. Osterlow said Skype will be moving quickly to tie in even more mobile users over [...]

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