Skype downloads on iPhone soar; FCC called in to oversee regulations

The recent release of Skype for Apple's iPhone has proved popular among users as the application has already been downloaded more than a million times, but has caused concerns from AT&T, the iPhone's exclusive carrier.

In a recent interview with USA Today, Jim Cicconi, AT&T's top public policy executive, says AT&T has every right not to promote the services of a Skype, which only works via the iPhone's Wi-Fi connection, and not AT&T's 3G network.

We absolutely expect our vendors--Apple, in this case--not to facilitate the services of our competitors, he says.

Skype is a competitor, just like Verizon or Sprint or T-Mobile, he says, adding, Skype has no obligation to market AT&T services. Why should the reverse be true?

Meanwhile, an Internet advocacy group called Free Press has asked the Federal Communications Commission to investigate whether or not restricting the application to iPhone's Wi-Fi connection is in violation of federal law.

In an open letter to the FCC (PDF link here), the Free Press asks the government body to confirm that mobile wireless Internet access is subject to the same rules as traditional broadband Internet.

The letter cites the FCC's Internet Policy Statement which states that consumers are entitled to run applications and use services of their choice in order to preserve and promote the open and interconnected nature of the public Internet.

Meanwhile, Deutsche Telekom has also threatened to block Skype on its European cellular networks. The telecoms company threatened not only to block Skype for iPhone from running on its cellular network, but on public Wi-Fi spots under its control as well. It went on to defend this move saying that VoIP calls put strains on its 3G network, but Skype disagrees -- blaming the company for unfair business tactics.

Other U.S. carriers like T-Mobile and Verizon allow Skype on their network. However, this does not mean that the nation's carriers don't feel threatened by the fact that Skype may steal their business. The VoIP leader enables free VoIP calls between mobile and desktop Skype users, and cheap international calls to landline and mobile phones which are at least 10 times cheaper rates compared to carrier's costlier voice minutes.