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May 14, 2010

Verizon Wireless says it is now offering free phone calls and instant messaging services to nine of its Android and BlackBerry smartphones as part of an exclusive deal with Skype. Wireless users of Verizon's service will be able to place free Skype-to-Skype calls and instant text messages, as well as low-cost calls to international wired lines and mobiles phones.

What's more, Verizon said that using the new service won't count against user's voice minutes or data plans with the wireless service provider.

Skype general manager Russ Shaw says "not so long ago, this was something that seemed very unlikely to the wireless industry. I mean, why on earth would a mobile service provider want to partner with a free service provider such as Skype?"

John Harrobin, senior v.p. of digital media and marketing for Verizon, said that the new offering was targeted at Verizon customers who frequently place international phone calls, such as business subscribers and foreign exchange students.

Verizon Wireless is also working to expand the Skype offering beyond BlackBerry and Android smartphones, but declined to be more specific. The free Skype mobile app will route calls over Verizon's circuit-switched voice network instead of VoIP, which is traditionally used to handle voice calls.

Harrobin says Verizon decided to go with its voice network over VoIP because of quality concerns with calls routed over the Internet.

Harrobin also said Verizon and Skype were working together in an effort to better expand the free phone service to new communications platforms and capabilities, such as video streaming and other means.

"That's mainly what our network was designed for: voice! Data networks are simply not designed for voice," Harrobin said.

Although Skype is still available as an app for several different mobile platforms, the company said the capabilities of its Verizon app will still remain exclusive to the wireless carrier.

"It will simply be the best Skype experience out there," Shaw added.

The new Skype/Verizon app is now available through download to nine BlackBerry and Android devices including the Motorola Devour.

Last month, Verizon said it added over 1.5 million new customers to its network during Q1. The news was ahead of the reduced estimate of 1.515 million net new customers' forecast by wireless industry analysts and an increase compared with the 1.277 million customers Verizon Wireless added last year for the corresponding period.

However, Verizon's numbers did fall short of the 1.9 million net activations reported yesterday by the industry’s No. 2 operator, AT&T Mobility.

AT&T also reported a steep drop in direct postpaid net additions falling from 875,000 customers during the first quarter of last year to 512,000 subscribers so far in 2010.

Despite the drop in direct customer additions, Verizon Wireless reported that its retail churn rate improved slightly from almsot 1.5 percent last year to 1.46 percent this year, while overall churn rates dropped from 1.47 percent to 1.4 percent.

Verizon Wireless’ year-over-year boost in new customer additions was driven by indirect customer sales, or those that signed up for services through a 3rd-party that lease capacity on Verizon’s network.

The wireless carrier noted that direct customer additions plunged from 1.26 million during the first quarter of last year to just 288,000 in 2010, while 1.3 million customers were added through reseller partners.

Verizon Wireless said it ended the quarter with a little under 93 million subscribers on its network, including 87.8 million direct customers, and that it also counted 7.3 million other connections that include machine-to-machine, e-readers and telematics bringing the total number of connections on its network to a little over 100 million.

Verizon Wireless’ service revenues managed to increase to over 5.73 percent year-over-year to $13.84 billion, almost $1 billion more than the $12.85 billion posted by AT&T Mobility.

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Source: Verizon Wireless and Skype.