Should AT&T be worried about new apps for Apple’s iPhone that use the Internet to connect cheap or free phone calls? No — not yet, at least.
Why not? Well, so far, there’s only one app — Truphone, currently ranked tenth in the “travel” category in Apple’s iPhone App Store. Initial reviews suggest it’s flaky, and Truphone expects you to pay 6 cents per minute to call other mobile phones in the U.S. and Canada — hardly a free lunch.
But we expect other companies — eBay’s (EBAY) Skype unit, for example — to eventually create more compelling iPhone apps for Internet phone calls, which could include free calling. Or maybe Vonage (VG) will create an iPhone app that can access their Internet phone service and uses your Vonage home phone number. But even then, we think there’s a minimal threat to AT&T.
Why? First, because Apple (AAPL) has absolute control over the apps that go into its store, and it’s said it will only approve VoIP apps that use the iPhone’s wi-fi connection to connect calls — not AT&T’s 3G data network. This is hardly convenient — you’ll need to find a wi-fi hotspot, then you’ll have to sit there while you make your call. Not going to work if you’re driving, for example.
Second, there are big missing features. You can’t receive calls with the same phone number that your mobile phone uses. And you’d need a separate voicemail account. And you’d still be using the same battery power as if you were making normal calls — maybe even more — so it’s not like you can sit around talking for hours, for free.
Perhaps more important: AT&T already has you locked in to a monthly calling plan that includes, in theory, all the domestic calling minutes you were planning to use each month. The worst that could happen: You bump your calling plan down to a cheaper one. You’re still on a 2-year contract, and you’re still paying more for service than the average AT&T subscriber. The only compelling use case right now is International calls, which make up a small minority of the calls people make from their mobile phones.
This could be a bigger deal in countries where the iPhone is sold without a contract, and operates on pre-paid calling plans — but carriers are already factoring that in to the phone’s purchase price. AT&T, for example, will charge a $400 premium when it starts selling no-contract iPhones later this year.
What will be interesting? To see how Google and its carrier partners — T-Mobile (DT) and Sprint Nextel (S) in the U.S. — police VoIP apps for the forthcoming Android platform, which, in theory, will be more “open” than Apple’s iPhone platform. In theory, it’ll be possible to write a VoIP app for an Android phone that runs on a 3G data network, and can operate from anywhere — wi-fi hotspot or not. You’ll still probably need to pay for a monthly bucket of minutes, but that’s where the phone companies could potentially feel a pinch.