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Chronicles

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Skype: 'Locked' phones unfair

NEW YORK — Are cellphone companies using their sway over handset makers to unfairly limit consumers' choices?  Skype, a pioneer in PC-to-PC calling, thinks so, and it wants the Federal Communications Commission to do something about it.

USA Today

Context & Ripple Effects

Skype spent early 2007 pushing past its PC-to-PC base: a mobile push was the natural next step after it launched the Skype Prime expertise marketplace in March, added PayPal money transfers to Skype 3.2 beta, and struck a deal with Easybits Software in May to court casual-game developers onto the service. Every one of those expansions assumes users can reach Skype wherever they are.

The locked-handset problem stands directly in that path: if US carriers control which applications ship on the phones they subsidize, Skype's service economy has no route onto the device. Its answer is regulatory rather than technical — a petition asking the Federal Communications Commission to treat carrier-imposed handset restrictions as an unfair limit on consumer choice.

First-order effects

  • The FCC must now decide whether to open a proceeding on handset locking, putting carrier exclusivity and software-restriction practices on the formal record for the first time.
  • Skype gains a public argument that reframes the dispute from 'a VoIP vendor wants distribution' to 'consumers are being denied choice' — leverage it lacked when negotiating with carriers bilaterally.

Second-order effects

  • Handset makers get squeezed between the carriers who fund their volumes and internet-service firms demanding open devices, raising the price of exclusive-deal arrangements.
  • Carriers face a strategic fork: defend locking before the Commission, or preempt the petition by loosening application restrictions on their own timetable.

Third-order effects

  • If the FCC engages, the case becomes an early test of whether open-access principles built for wireline networks extend to wireless handsets — a template for how regulators treat carrier control over what runs on consumer devices.
  • A pattern of carriers restricting rival voice services on their networks points toward the broader fights over network neutrality migrating from fixed broadband to mobile.

The trend: The battle over network neutrality is moving from the wired internet to the wireless handset, with application providers like Skype using regulators to break carriers' grip on device software.