Verizon Wireless may soon offer its subscribers a new and inexpensive way to make calls. The carrier is likely to begin to offer VoIP services Skype on its handsets.
According to BusinessWeek, “The service will let customers make Skype calls over the company’s 3G data network.” The deal would allow Verizon Wireless subscribers to make low-cost or no-cost voice calls while Verizon would concentrate on marketing highly profitable data services.
The partnership would have few risks for Skype but a number for Verizon, While the carrier does not make huge sums on its voice services, it does profit on overseas calls and Skype could undermine this business. Data use on the Verizon network and those of its competitors is growing. but 3G networks are burdened with this traffic which has caused dropped calls and customer service problems.
The Skype deal is another example of the growing price wars among the four large US carriers–Verizon, AT&T (T), Sprint (S) and T-Mobile. This competition my bring down consumer prices for cellular service, but it is bound to erode profits at the carriers. And, cellular services are the most profitable businesses that they have.
Douglas A. McIntyre
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