AT&T’s Skype Move Won’t Stop Net Neutrality Push

AT&T’s decision to open its 3G wireless network to calls from VoIP provider Skype came as a significant concession to the growing number of government officials and advocacy groups pushing for Net neutrality rules for wireless providers.

Still, the move seems unlikely to derail the momentum for greater regulation of the wireless sector that is building at the Federal Communications Commission.

Responding to AT&T’s (NYSE: T) announcement to allow iPhone users to access Skype on its network, FCC Chairman Julius Genachowski praised the decision, but gave no indication that he plans to back off his push for wireless Net neutrality.

“Opening wireless services to greater consumer choice will drive investment and innovation in the mobile marketplace,” Genachowski said.

AT&T’s directive to Apple (NASDAQ: AAPL) to remove the block on Skype calls, effective immediately, stems from an inquiry the FCC launched this summer asking for answers about Apple’s decision to keep Google’s (NASDAQ: GOOG) Voice application out of its iPhone app store.

The responses from the three companies involved shed new light into the relationship between Apple and AT&T, the iPhone’s exclusive U.S. carrier, and the process by which decisions are made about applications that could compete with their voice services.

In its response, AT&T explained that it had no role in keeping Google Voice app off the iPhone, but that it had a contractual agreement with Apple to block Skype and other VoIP services from running on its 3G network, though they had been available to iPhone users through a Wi-Fi connection.

At the time, AT&T said it would reconsider its policy regarding VoIP applications on its 3G network.

In the months since, the regulatory climate has become less favorable to the wireless sector. In August, the FCC issued a series of notices of inquiry probing the state of competition, innovation and investment in the industry. Then in September, Genachowski announced his intention to open a rulemaking proceeding to establish more forceful Net neutrality rules, making it plain that they would extend to wireless operators.

AT&T’s move is unlikely to hasten a change of course at the agency, according to one prominent telecom analyst.

“With wireless treatment a key aspect of the FCC’s network neutrality rulemaking, AT&T’s announcement should remove one likely thorn with regulators, but does not, in our view, halt the movement toward applying Net neutrality to wireless,” Stifel Nicolaus analyst Rebecca Arbogast said.

For the wireless industry, Genachowski’s proposal is a significant threat. In August, Steve Largent, president and CEO of CTIA, the leading wireless industry association, told that wireless Net neutrality was his greatest concern among all the policy issues surrounding the sector he represents.

CTIA is holding its biannual conference this week in San Diego, with Genachowski scheduled to deliver a keynote address later this afternoon. In his speech, he is expected to reiterate his support for open wireless broadband networks, while assuring his audience that Net neutrality rules will contain some flexibility to accommodate the unique technical characteristics of the mobile sector.

For Skype’s part, AT&T’s decision was a welcome development, but the company didn’t back off its calls for the FCC to intervene with concrete rules.

“The positive actions of one company are no substitute for a government policy that protects openness and benefits consumers,” Skype President Josh Silverman said in a blog post.

Skype has a two-year-old petition pending with the FCC calling on it to apply the open-access provisions that govern the wireline telecom sector to wireless.

The FCC has not acted on Skype’s petition, though the wireless Net neutrality rules would effectively settle the matter. The commission plans to vote on its Net neutrality rulemaking at its next open meeting, scheduled for Oct. 22.

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