Skype Calls for Open 3G Cell Phone Networks

Press Release - February 26, 2007

Internet VoIP provider, Skype Ltd., is citing a 1968 ruling by the Federal Communications Commission in its quest to open up America’s mobile phone networks to “external third-party applications,” including free VoIP software.

The 1968 Carterphone decision, which involved an early wireless handset, established that carriers could not stop customers from attaching external devices to a wired telephone network, so long as the device didn’t do any damage to network facilities. Skype is arguing that this ruling also applies to 3G wireless data networks, which in many cases choose to disallow the use of external software applications.

If approved by the FCC, Skype’s request would seriously cut into the revenue of carriers, allowing cell phone users with unlimited mobile data access to make free (or virtually free) long distance calls over the internet.

The U.S. wireless industry has slammed the request, saying that it would freeze innovation and prevent future upgrades to wireless networks.

“Skype’s self-interested filing contains glaring legal flaws and a complete disregard for the vast consumer benefits provided by the competitive marketplace,” said Steve Largent, president and CEO of the Cellular Telecommunications & Internet Association (CTIA).

Although, from an economic point of view, Largent is almost certainly right, it’s difficult to deny that Skype has a legal leg to stand on. The Caterphone ruling essentially gave customers, not carriers, the right to determine how telecommunications networks are used, and for better or worse, that precedent will be hard to ignore.