Cell phone war! AT&T about-face on Web calls hours after Verizon-Google pact

10/06/2009 07:23 pm ET | Updated May 25, 2011

Just hours after its Verizon Wireless (VZ) announced a major deal Tuesday to sell new phones equipped with Google's (GOOG) Android mobile operating system, its arch-rival AT&T (T) said it would reverse its restrictions on voice-over-Internet calls. Apple iPhone users will now be able to use Internet-calling applications like Skype on AT&T's data network, in addition to making calls using Wi-Fi networks.

AT&T's move comes on the eve of the annual wireless industry conference amid a flurry of action in the mobile space. It represents a major reversal for the mobile giant, which is under Federal Communications Commission scrutiny for its role in Apple's decision to restrict the Google Voice application from its app store.

A Google spokesman said the company had not been informed of any change in Apple's policy regarding Google Voice. Apple did not immediately return a request for comment.

Prior to today's reversal, AT&T had resisted allowing applications like Skype on its data network, saying such services would clog up its network. But on Tuesday, AT&T notified the FCC that it was reversing course and would now allow Internet voice services like Skype, which users had previously been able to use only with access to a Wi-Fi hotspot.

"IPhone is an innovative device that dramatically changed the game in wireless when it was introduced just two years ago," said Ralph de la Vega, the chief executive of AT&T's consumer and wireless unit, in a statement. "Today's decision was made after evaluating our customers' expectations and use of the device compared to dozens of others we offer."

AT&T's decision comes as the FCC, under the leadership of new Chairman Julius Genachowski, is plunging head first into wireless broadband policy with its recently announced net neutrality rules, which aim to prevent broadband carriers from blocking certain types of web traffic in favor of their own data. Genachowski hopes to formalize existing net neutrality policies and add two more, including a rule which would extend the principle to wireless networks.

AT&T has maintained that it was Apple's decision to reject Google Voice, but many industry watchers believe that AT&T's role in the rejection may have been more significant than then company is saying. For its part, Apple has maintained that it is still evaluating whether to allow Google Voice.

One explanation for AT&T's timing may be that the mobile giant is trying to preempt Genachowski's push for wireless net neutrality, which the commissioner is sure to emphasize during a speech Wednesday at the CTIA Wireless Association conference in San Diego. Now that AT&T has reversed itself on Internet calls, it can argue that net neutrality rules aren't needed in the wireless space and the market will advance consumer interests without the need for government regulation.

AT&T has been fiercely opposed to net neutrality regulations, especially in the wireless space, and recently engaged in a bitter round of sniping with Google over the issue.