What Does Allowing VoIP Cost AT&T (NYSE:T)

There was a reason AT&T (NYSE:T) wanted to keep VoIP applications off of its 3G network, and that reason was almost certainly that the applications will cost the company money.

The big phone firm said Apple (NASDAQ:AAPL) will be be allowed to  enable VoIP applications on the iPhone to run on AT&T’s wireless network. Previously, VoIP applications on iPhone were enabled for Wi-Fi connectivity.

The decision probably means that Vonage (NYSE:VG) and the Skype division of eBay (NASDAQ:EBAY) will also attempt to get approval for their VoIP applications.

VoIP products are often free, or cost the consumer very little. Vonage has service that costs  $29.95 for calling both inside and outside the US. That will likely cost AT&T a great deal of money for international calls made from iPhones. The question of whether not VoIP can cut into revenue that AT&T collects from 3G data transfer is open to question.

AT&T fought VoIP applications for a reason. Its wireless operations just got a little less profitable.

Douglas A. McIntyre