AT&T launches VoIP app for international calls
AT&T is launching a new mobile app that allows its smartphone customers to make international calls via VoIP. The new AT&T Call International will allow customers to make calls overseas at cheap rates like 4 cents per minute to China …
Context & Ripple Effects
AT&T built its international business on monthly add-ons — the $25 and $60 international iPhone data plans it introduced back in 2007 — and only extended flat-rate thinking to domestic voice with unlimited calling to any mobile number in February 2011. International minutes themselves stayed priced the old way until now.
The new app lands at a crowded moment: Vonage had already put free over-the-top calling on iPhones and Androids with its Facebook-calling mobile app in 2010, and AT&T is chasing the T-Mobile USA acquisition while riding its most successful iPhone launch ever with the 4S. Offering OTT-style rates itself keeps that traffic on-network instead of ceding it to third-party apps.
First-order effects
- AT&T smartphone customers can now buy international minutes in-app at rates like 4 cents per minute to China, undercutting the carrier's own traditional per-minute international billing.
- Vonage and similar over-the-top calling apps lose their price advantage on AT&T devices, since the carrier now bundles comparable VoIP rates into its own client.
Second-order effects
- Verizon and Sprint face pressure to match app-based international pricing or watch roaming and long-distance revenue migrate to whichever carrier's customers can call abroad cheapest.
- Prepaid calling cards and PC-based calling services, already squeezed by mobile VoIP, lose another slice of the diaspora-calling market to a carrier-distributed app.
Third-order effects
- A carrier adopting the disruptor's own model signals that per-minute voice — domestic or international — is becoming an app feature priced off data plans rather than a standalone billing product.
- If the pattern holds across US carriers, international calling consolidates around a few carrier-controlled VoIP clients, raising the question of how regulators view voice services sold by companies simultaneously seeking approval for major mergers like AT&T's T-Mobile bid.
The trend: US carriers are absorbing over-the-top VoIP rather than resisting it, converting international calling from a premium per-minute product into an app layered on data plans.