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Skype-Verizon Deal: More Details

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Skype and Verizon (s VZ) 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 (s 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.

39 Responses to “Skype-Verizon Deal: More Details”

  1. 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.

  2. 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…

      • 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.

      • 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

  3. Sevenmack

    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.

  4. 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…

  5. 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?

  6. 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.

  7. 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.

  8. 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?

  9. 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.