Nokia (NOK) And Skype's Cellular Threat

Just as there is talk of the FCC opening up spectrum for companies to set up independent voice and data networks, Nokia (NOK) has announced that its adding Ebay’s (EBAY) Skype VoIP service to some of its handsets.

The two pieces of news show that the revenue of US cellular giants Verizon (VZ), AT&T (T) and Sprint (S) could be under siege within a year or two.

The FCC auction may allow companies like Google (GOOG) to buy portions of the wireless spectrum and offer services independent from current cell companies. It could also set-up a system where, with minor modification, an Apple (AAPL) iPhone could run on a network other than AT&T’s. Perhaps the biggest threat to the large telcos is an open system where consumers could download software and multimedia without having to get electronic "permission" from their carriers. This would make it easier for Google to get its search and location software onto phones.

Nokia is the world’s largest handset company with about 35% of the global market. If it become aggressive in adding VoIP to its phones they can be used for free internet calls in wireless hot spots. This would allow consumers to by-pass the toll that current cell providers charge per minute of calling time.

Not a good day for the phone company.

Douglas A. McIntyre can be reached at [email protected].  He does not own securities in companies that he writes about.