What it’s like when the FCC does its job by Scott Olster @FortuneMagazine January 5, 2011, 5:47 PM EST E-mail Tweet Facebook Google Plus Linkedin Share icons By Chadwick Matlin, contributor It took Skype two years to finally make its way to the iPhone. And when it did, it only allowed calls over a Wi-Fi connection—talking to friends over 3G was strictly prohibited. AT&T’s T network, we were told, could barely handle regular phone calls, let alone ones that took place over the Web. A million people downloaded the app in its first two days anyway. Over a year and a half later, that kind of limitation is regarded as what it is: anti-competitive. Last week, Skype released its latest app update, and it now lets you do more than just call somebody—it lets you see your friend as you’re talking to her, and lets her see you. It’ll let you do this no matter what network you’re using: Wi-Fi, 3G, whatever. Videochat isn’t new, as you’ve no doubt learned from those treacly (yet effective) Apple AAPL commercials that promote the iPhone’s FaceTime feature. But FaceTime is Wi-Fi-only; AT&T doesn’t allow Apple to connect video chat over 3G. That Skype, a third-party company, now bests Apple at its own game is a remarkable about face from the way things were. Send your thank-you notes to the FCC. By asking a few questions, the FCC made 2010 the year that the iPhone platform was finally forced to play nice. The new Skype videochat feature is a fitting capstone. After more than two years of doublespeak, restrictions, and censorship, it appears the free and open mobile future we’ve dreamed about is upon us. Every morning, discover the companies, deals, and trends in tech that are moving markets and making headlines. Sign up now! To understand how far we’ve come, let’s revisit from where we came. In July 2009, a squabble erupted between Apple and Google GOOG that you’ve hopefully forgotten about by now. Google’s telephone service, Google Voice, was beginning to make in-roads on the web, and apps using the service (but not made by Google) were proliferating in the App Store. Suddenly, Apple stripped Google Voice apps from its App Store. Notably, the way Apple stripped Google Voice off of the iPhone was to leave the official Voice app in limbo—neither in the App store, nor banned from it. It stirred enough righteous outrage from the tech industry that the FCC got involved, asking both companies to explain the situation. Apple claimed that the Google Voice apps were stripped because they “duplicate features that come with the iPhone.” And it had more to say about the official Google Voice app: The application has not been approved because, as submitted for review, it appears to alter the iPhone’s distinctive user experience by replacing the iPhone’s core mobile telephone functionality and Apple user interface with its own interface for telephone calls, text messaging, and voicemail. By forcing Apple to go on the record, the FCC had exposed Apple at its most obstinate. It became clear that the closed system Apple prides itself on had metastasized into an abuse of power. And the process the FCC set in motion in 2009 produced a result in November 2010. That’s when Google Voice finally became available in the App Store, with all of its features intact. All the third-party apps are now back in the store, free to duplicate whatever features they like. Skype’s evolution on the iPhone is an even clearer example of what happened after the FCC sets its precedent in the Google Voice case. In October 2009, a few months after the initial Google Voice probe, AT&T announced that it was no longer going to ban apps like Skype and Google Voice from placing calls over its 3G network. By May 2010, Skype had released a new version of its app that took advantage of AT&T’s new leniency. And now we have an app that can videochat on both networks. The FCC ended its 2010 by releasing new net neutrality guidelines in late December. Frustrated with the murky ethics of the Internet—both on phones and at home—it proposed that Internet service providers should not be able to charge extra for certain sites and services at home, but it can charge for them on a phone. But it also clearly stated that mobile carriers can’t block apps that compete with their own product—apps like Skype and Google Voice. It’s a move to make explicit through regulation what was implicit through investigation. For the past year and a half, the FCC was the mob. Now it’s trying to be the mayor. In 2011, we’ll get to see if there’s any difference.