Why Verizon and Skype’s backdoor deal hurts Android by Seth Weintraub @FortuneMagazine August 21, 2010, 5:22 PM EDT E-mail Tweet Facebook Google Plus Linkedin Share icons The pact has effectively meant disabled Skype for Verizon users and locked out Android users on other carriers. Verizon and Skype announce pact in Feb. via intomobile.com In February at the Mobile World Congress in Barcelona, Verizon and Skype announced a partnership that would put Skype on most of Verizon’s Smartphones including BlackBerry and Android devices. But this isn’t Skype like you’ll find on an iPhone, Symbian phone or computer. Verizon’s brand of Skype, which rolled out to BlackBerries and Android phones on their network in March, uses the smartphone’s voice line to make calls rather than a data connection. When you use Skype to call a domestic phone number, you incur monthly minutes on Verizon just like a normal call. What’s the point? Skype’s motivation is that international calls over Verizon GOOG Skype are billed to the user’s Skype account, which means Skype gets paid on its high revenue service, but doesn’t have to provide free domestic service which is part of its yearly plan on all other platforms. Incoming calls to Skype also work…if you have the Skype application open. Compared to the normal Smartphone user’s version of Skype, this is almost completely useless. Even worse, if you even have Wifi enabled, Skype won’t open on a Verizon phone. That means you have to pretty much kill the Wifi use on your phone if you want to use Skype. All of this is forgivable. This is Verizon after all. They make the rules. If you want to play on Verizon’s network, you play by their rules, which aren’t going to be consumer friendly in any way, shape or form. But they do usually have the best network. You know this when you sign up for two years. But what kills me is that “for some reason” after this partnership, Skype isn’t building an application for Android (or BlackBerry) for other carriers, even internationally. It looks like they’ve effectively given up on two of the biggest smartphone platforms to close this deal with Verizon. If you look on the Android Market for a Skype application (see video above) you’ll find a few third party applications, some of which can connect to the Skype network and make calls. But these aren’t full-featured Skype products. One such application, Fring, was recently banned from using Skype’s network. I was able to use Fring to video conference over Skype briefly before Skype blocked Fring. It worked well and offered a rough workaround for Skype’s complacency. Maybe too well. Skype tells a different story about the blockage, but reading the comments shows how much Android and BlackBerry RIMM users are up in arms about Skype’s lack of an Android application. The bottom line is that you can’t get a real Skype client on Android. Skype’s deal with Verizon hurts Android as a platform. So why does Skype leave BlackBerry and Android devices out in the cold for the friendly confines of Verizon? Certainly, in the long term, Android (by far the fastest growing smartphone platform) compatibility is important. One possibility is that prepping for an IPO has Skype thinking short term. Lucrative carrier agreements are good to have on the books, even if it means signing away two of the biggest platforms that your customers want to use. Another possibility for the general Android snub is that Google GOOG is putting all the parts together for a Skype competitor. Right now, their Google Voice product allows you to use another number, but Google hasn’t quite integrated all of its Voice (Gizmo5) and Video (Global IP Solutions) parts yet. But you can bet they will and they’ll be competing directly with Skype. That doesn’t bode well for Skype’s long term prospects. But then why block BlackBerry? I think it goes back to that agreement with Verizon. It seems that Skype sold all of their BlackBerry users down to river to close this deal with Verizon. Strangely, Skype hasn’t released a client outside of the US for either BlackBerry or Android. Could their exclusivity agreement with Verizon have been an international one? As a consumer, I’ve pretty much given up on Skype as they’ve put the carriers in front of their customers and haven’t done much in the way of innovation since they got picked up by eBay. That is unfortunate because at one time, they owned the world’s VoIP. If I am a potential investor in a Skype IPO, I don’t see a good long term future if they don’t put their customers first, no matter how many advertising revenue opportunities exist.