The ability to use VoIP over 3G and Wi-Fi turns iPhone into more powerful tool: AT&T, under pressure from the FCC to explain precisely why the iPhone can't place VoIP calls over 3G when its other smartphones can, reversed its previous policy. Apple will be updating its App Store rules to let developers run VoIP connections over any available network medium, not just Wi-Fi.
This change is a big one for AT&T, which I'm sure wrestled with lawyers, spreadsheets, and customer surveys before implementing the move--a move which could have been forced on the firm by the FCC.
And I think it's a good one for AT&T, despite the potential loss of revenue.
Why? Because it's yet another tool for customer loyalty to a company whose 3G network has delivered sub-par performance. I've been generally satisfied with AT&T's service, but I don't live in areas of weak coverage, and I don't travel extensively. (Two recent trips of hundreds of miles each across rural and highway portions of Oregon and Washington were generally satisfactory.)
In fact, AT&T turning on 850 MHz base stations in Seattle has distinctly improved my iPhone phone and data experience, especially in my house.
The move to allow VoIP over cell data means that iPhone customers can turn to Vonage Mobile, Skype, or other programs in new versions to make calls outside the U.S. at rates that aren't insanely high, and can downgrade subscription plans to have fewer minutes in the plans, relying more on VoIP for domestic calling.
But if you look at subscription trends already, this isn't as disruptive as it looks. I have no idea how many people pay AT&T's wireless international rates; perhaps billions are spent, but the costs are so high, I have to believe that most people are motivated to use calling cards or other solutions, which have included VoIP over Wi-Fi with Skype on the iPhone.
AT&T already offers rollover minutes, free evening and weekend calling, and free mobile-to-mobile calling as part of its cheapest postpaid plans. For most iPhone customers, AT&T gets a minimum of $75 per month ($40 voice, $30 data, $5 for the cheapest IM package); multi-line plans with two phones start at $120 ($40 voice, $10 extra line, $60 for two data plans, $10 for two IM plans).
For $100 per month, you can get unlimited voice from AT&T, so that's maybe the biggest competition for the firm: the $60 difference between a limited-minutes $40 plan and unlimited $100 plan.
However, never forget that the cost of customer churn and acquisition (and re-acquisition) is exceptionally high in the cellular industry, racking up hundreds of dollars per customer between advertising, subsidies for new phones, and company stores or commissions to independent stores.
If AT&T ups its iPhone customer retention rate by a measurable amount, the company likely saves more than the difference, and achieves better costs of scale, too.
Also remember that every minute someone uses a VoIP service over Wi-Fi is a minute that AT&T doesn't have to pay for (or pays very little for at its hotspots), and doesn't have to provide customer service for. Every minute of VoIP over 3G requires the firm carries roughly the same data traffic with none of the responsibility for call completion, billing, fee settlement, or customer support.
AT&T may actually benefit quite a bit from this change in policy, which may be why it didn't opt for prolonged legal action.