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AT&T should embrace iPhone VoIP over 3G

Don Reisinger thinks AT&T should embrace VoIP on the iPhone. Does his argument hold up?

When the App Store was announced and Steve Jobs was discussing the possibility of iPhone applications totally transforming the way we use Apple's devices, he was asked if it would support VoIP on the iPhone. In response, Apple confirmed that VoIP would be available in the App Store as long as it was running on Wi-Fi, but not AT&T's 3G network. The company claimed that any VoIP solution running on 3G would be in violation of its exclusivity deal with AT&T.

But now that Global IP Solutions has released VoIP software for the developer community, I think it's time we explore why AT&T doesn't want iPhone VoIP running on its network.

Now I know that the first response will be because the company will lose substantial revenue as people use VoIP instead of its own network, resulting in less usage and fewer overage charges, but I think that's a bit short-sighted.

First off, no one is telling AT&T to allow VoIP on all its devices, just the iPhone. Secondly, why can't AT&T get in on the sale of VoIP solutions and encourage people to buy them from the App Store as way to reduce overages?

It may sound radical, but it just might work.

One of the main concerns every cell phone owner has is whether or not they will be charged additional fees for spending too much time on the phone. But with the help of VoIP, they'll be able to reduce the number of minutes they use and in turn, save some cash each month. In the process, AT&T will lose revenue and probably feel the effect of VoIP in no time.

And while the initial shock of lost revenue could be jarring, we can't forget that the iPhone customers are just one segment of AT&T's revenue source and they certainly don't account for the majority of users. That said, iPhone users are most likely to add apps to their devices and are more likely to use a VoIP app than someone using a BlackBerry or Treo.

But who cares? AT&T will lose some revenue in the short-term, sure, but why wouldn't it create a VoIP application of its own and sell it on the App Store, dubbing it the "official VoIP application for the iPhone 3G?" That app may not make up for the lost revenue in overage charges, but it will effectively create a PR campaign that the company can exploit for months: AT&T is the only cell phone carrier that's willing to let you use a different voice communication solution on its own platform, and thus, save you money.

The long-term effect of allowing iPhone 3G users to use VoIP over 3G could have a major impact on AT&T's bottom line. Current users would tell others that after buying an iPhone, they too will be able to reduce their monthly payment to one offering less minutes and use VoIP instead. In the process, AT&T could advertise that simple fact and probably see an influx of customers that are looking to save some cash on cell plans and own an iPhone at the same time.

It may be a risky move, especially considering AT&T may not be the desired carrier for some people, but I think it's a risk worth taking. Let's face it -- not all iPhone users will use VoIP anyway and more often than not, it'll be easier for them to make calls with their phone than to use VoIP on the device, since 3G is hardly ubiquitous.

But for every risk, there's the possibility of enjoying a huge reward. AT&T could lead the pack in VoIP communications over a cell network and exploit its "desire to make customers happy" to steal more customers from competing carriers.

Cell phones are quickly reaching saturation and cell carriers will be forced to steal customers from now on instead of gaining those without plans. And as that happens, they will need to differentiate themselves and try to entice more people to their side. And what better way to do that than to use the iPhone 3G as a test market and offer customers the opportunity to come to AT&T and enjoy all the benefits of VoIP?

Sure, it's radical. But at this point, throwing some caution to the wind wouldn't be such a bad idea for AT&T. And let's not forget that no one has a gun to the executives' heads: they can always stop supporting VoIP whenever they feel like it if it puts too much of a strain on the company's bottom line.

Check out Don's Digital Home podcast, Twitter feed, and FriendFeed.