AT&T's, Verizon's Mobile VoIP Moves Reveal Political Concerns

The timing of the announcements by Verizon Wireless and AT&T was almost transparent. Both came just a couple of weeks after new FCC chairman Julius Genachowski's September 21 speech on network neutrality. In that speech, Genachowski stated, among other things, that neutrality rules should cover wireless communications. Even then, it was clear that mobile VoIP would be the most explosive issue in the network neutrality battle.

The first substantive response came this morning from Verizon Wireless, which announced it would soon introduce two handsets running the Google-developed Android operating system, with a Google Voice application built in. Later in the day, AT&T said it would allow VoIP services to run over its 3G network. Combined, the announcements made clear that the carriers were willing to make major changes either to voluntarily promote the ideals of openness and competition in the wireless industry, or to head off regulation that forced them to involuntarily do so.

Verizon's announcement would be significant on its own. Google Voice-equipped Android handsets will bring a major change to the carrier's international mobile calling business. Users will be able to pay low Google Voice VoIP rates for overseas calls, rather than exorbitant cellular international rates. That will deal a major blow to one of the cellular industry's fattest cash cows.

AT&T's announcement was even more momentous. Allowing VoIP services such as Skype to run over its 3G data network has the potential to undermine the carrier's central business model. It would let users bypass the cellular voice service, with all its minutes-based packages, fees and overages, altogether. All they would have to pay the carrier for would be the wireless bandwidth their VoIP calls consumed. That's relatively little bandwidth, and the bandwidth itself is relatively cheap. Such realities make it a lot harder for wireless carriers to make money from VoIP running over their data networks than from selling voice minutes.

The announcements came in conjunction with an intense lobbying and PR effort by the wireless industry. One of the key arguments in the effort is that the industry is already competitive, and thus there's no need for wireless network neutrality regulations. And on the surface, the two announcements appear to prove the argument, because they demonstrate that the carriers are even willing to allow services to run over their networks that compete with their own services.

On the other hand, the announcements also create a big problem for the lobbying effort. By coming so soon after Genachowski's speech, they also appear to show that the mere threat of wireless network neutrality regulation is more effective than appeals to idealism in convincing carriers to allow more competition on their networks. That sort of undermines the argument that such regulation is needless and useless.