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Media, Communications, Internet

iPhone Raises its Internet Voice


Apple added a VoIP service from Truphone to its iPhone App Store, which  launched Friday, a move that could take a bite out of AT&T's revenue.

Low-cost mobile Internet phone via the App Store could prove a hit for fans of Apple's iPhone but a threat to its carrier partners.

"AT&T cannot like this because roaming is a big part of its revenue stream and with VoIP this easily available, AT&T's revenue has to take a hit," said Moe Tanabian, a principal with IBB Consulting.

But innovation doesn't wait for old businesses to adapt. Apple also plans to add popular Internet phone service Jajah, a Truphone rival, to its list of mobile applications available via its App Store. Such mobile Internet phone services could also be enticing for business travelers, who could get lower international calling and roaming rates.

Internet phone promises to steal significant international calling and roaming revenue from the iPhone's carriers worldwide. That's because those mobile voice over Internet Protocol calls are rerouted from expensive networks to the  Internet, where rates are cheaper.

In the past cell phone users have been forced to find clever ways around   carriers to make calls via the Internet, but the iPhone's Wi-Fi capability combined with VoIP makes cheaper calls a no-brainer.

Truphone CEO James Tagg said carriers' revenue lost from international calls on mobile phones have already been hit because of Internet phone calls.

"No one is going to phone Europe and pay two pounds a minute on an AT&T phone because they can use Skype, Vonage, or a calling card, so the revenues the carriers are losing from international calling are approaching insignificance," he said.

That doesn't mean carriers should be happy to lose more revenue from lost international calling and roaming charges, even if it lessens their network traffic.

"It's like a regular passenger telling a cab driver that he is now using the train to free the driver’s car from the wear and tear of taking him to work every morning," Mr. Tanabian said.