Should AT&T be obliged to enable Skype for the iPhone?

With the P2P voice communication service Skype now available for Apple's iPhone, eBay's venture into the telecommunications field now is now deployed on the world's most prominent handset. Apple is supporting the application by making it available on the iTunes App Store; reports tout Skype as the single most downloaded free application on iTunes.

That's a problem for carrier partners such as AT&T, because the business model on which the iPhone is based presumes customers will be placing calls on the carrier's network, not through the Internet. Last Friday, AT&T fired a shot across Apple's bow, with its senior executive vice president for legal affairs, Jim Cicconi, stating for USA Today, "We absolutely expect our vendors...not to facilitate the services of our competitors."

Cicconi's statement came in response to questions about whether AT&T could go forward with plans to stifle Skype's use on the iPhone and other handsets. Officially, it hasn't yet done so, although users are reporting unofficial moves are taking place. An official Skype blockade would not be unusual for the carrier, which two years ago blocked calls to a free call conferencing service that used the Internet as its backbone. Those were blocked telephone calls, however; blocking Skype would require some kind of IP address restriction.

In fairness, Cicconi didn't actually address whether AT&T would go that far with Skype, and actually seemed to imply that the ball was in Apple's court with regard to maintaining its bargain with AT&T. But in an immediate effort to pre-empt any move AT&T may choose to make, the advocacy group Free Press wrote Acting Federal Communications Commission Chairman Michael Copps (PDF available here), urging him to make AT&T adhere to FCC guidelines regarding accessibility of Internet services through wireless carriers.

"Wireless networks demonstrate numerous anti-consumer practices that may be violations of the Commission's Internet Policy Statement," write Free Press' policy advocates Ben Scott and Chris Riley. "In some cases, these appear to be outright restrictions on applications, services or devices imposed by the carrier. In other cases, there appears to be a business relationship between carriers and equipment vendors designed to cripple applications or hinder consumer choice for anticompetitive purposes."

Riley and Scott referred to the FCC's 2005 Statement (PDF available here), which Copps has championed frequently since its adoption. The Statement provides four guiding principles for preserving wireless consumer choice in Internet services, one of which states, "Consumers are entitled to run applications and use services of their choice, subject to the needs of law enforcement."

As the conclusion of the Commission's 2005 document reads, "The Commission has a duty to preserve and promote the vibrant and open character of the Internet as the telecommunications marketplace enters the broadband age."
But that actually may be inaccurate, for reasons which the Statements document makes clear in the preamble: The FCC doesn't actually regulate Internet commerce or transactions; the Telecommunications Act restricts its purview to the public airwaves and private carriers. Yet the FCC took it upon itself to regulate how the carriers under its purview provide access to the Internet. In so doing, it opened up a debate over whether it had the right to do so in the first place.

This will be one of the major issues facing incoming FCC chairman Julius Genachowski, upon being confirmed by Congress. On one side of the argument, the FCC has proclaimed its own duty to maintain free and fair access to Internet services through carriers. On the other side, the FCC also has a duty to preserve the local and nationwide phone services from which states, cities, and municipalities receive a good chunk of their tax revenue -- another income source that Skype's very existence directly threatens.