Indiana Grain Company, LLC

Posted: 02/13/10

By: tomgrisafi

Verizon Wireless, the largest U.S. wireless carrier, will include Skype Technologies SA’s Internet- calling software on phones to stave off competition from AT&T Inc., according to two people familiar with the matter.

The service will let customers make Skype calls over the company’s 3G data network, said the people, who requested anonymity because the agreement hasn’t been announced. Verizon and Skype said yesterday that they will hold a joint press conference Feb. 16 at the Mobile World Congress in Barcelona, Spain. The companies gave no further details.

Verizon is relying on 3G data plans for growth as demand slows for voice calls. Teaming up with Skype could draw new users, who might boost spending on extra features. The agreement sets the stage for similar deals with other carriers, said Vanessa Alvarez, an analyst at Frost & Sullivan in Boston.

“It’s a big win for Skype,” Alvarez said. “The wireless operators and incumbent service providers are starting to think differently and accept these types of partnerships. Others are going to follow.”

Skype already works on AT&T’s Wi-Fi networks in the U.S. Skype has said it’s developing a version that will work on AT&T’s 3G network as well.

Skype has been lobbying the U.S. Federal Communications Commission to prohibit carriers from blocking Internet traffic on their wireless networks, something that’s hindered its growth. The agency may vote on these so-called net-neutrality rules this year.

Verizon Wireless is co-owned by Verizon Communications Inc. and Vodafone Group Plc. Revenue from its data plans, which make up almost a third of wireless service sales, grew 46 percent last quarter. That was almost double the carrier’s total sales growth of 23 percent.

Verizon cut the price of unlimited calling plans over its voice network last month, making them $69.99, down from $99.99. The new price is part of a larger move to get subscribers to pay for more data plans. AT&T cut its prices the same day.

Skype aims to reach $1 billion in revenue by 2011. Sales and profit growth accelerated last year, Chief Executive Officer Josh Silverman said in an interview last month. Skype is the largest provider of international calling services, accounting for more than 12 percent of all cross-border voice traffic, according to Washington-based research firm TeleGeography.

Verizon Communications fell 11 cents to $28.93 yesterday in New York Stock Exchange composite trading. Shares of the New York-based company have dropped 13 percent this year.

Source: Bloomberg