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Skype (News - Alert) and Verizon Wireless in February announced plans to offer Skype’s service to Verizon Wireless smartphone customers, with some twists that show creative thinking on Verizon's (News - Alert) part.

 

For starters, it is likely Skype will be used primarily to make international calls, as use of Skype requires a smartphone with a data plan and a voice plan. The voice plan supports any-distance calling within the United States, so there is no advantage to using Skype domestically (users may opt to call domestically using SkypeOut, for an incremental charge, but that wouldn't make much sense for most users on most plans).

 

Verizon is betting that the upside, in the form of heavier sales of data plans, will outweigh some cannibalized international calling revenue. Terms were not announced, but it is likely Verizon will participate in SkypeOut traffic terminating in the United States, for example.

 

Verizon also will transport Skype traffic over its CDMA voice network, which will ensure Skype better call qualty and also shift traffic from the congestion-sensitive 3G network to the easier-to-manage CDMA network. There is likely some upside to Verizon in that regard as well, since Skype likely is willing to pay Verizon as it pays other long-haul transport providers for carriage.

 

In principle, the deal exemplifies the 'two-sided' revenue model, where a carrier has revenues generated both from end users and from business partners.

 

Initially, Skype mobile will be available for the BlackBerry Storm 9530, BlackBerry Storm2, BlackBerry Curve 8330, BlackBerry Curve 8530, BlackBerry Curve 8830 World Edition, BlackBerry Tour 9630, Motorola (News - Alert) Droid, HTC Droid Eris and Motorola Devour.

 

Verizon has suggested it has other plans as well. Having a Skype option would ease the task of handling voice on 4G networks in the early going, or even longer, were Verizon to decide it could gain a marketing advantage by essentially offering 'free and cheap calling' provided by Skype, instead of specific voice plans on its 4G network.

Josh Silverman, CEO of Skype, said he felt the partnership with Verizon was perfectly natural, given Skype’s recent strategy of pushing further and further into operators’ networks. “By working with Verizon we can offer a service that is second to none,” Silverman said. By embedding it in the mobile network proper, the use cases for Skype balloon, as the user is no longer dependent on a PC or a Wi-Fi connection. “Suddenly, inbound calling becomes very possible because I’m not tethered to a PC anymore,” Silverman added.

 

Verizon also may have been watching U.K. mobile operator Hutchison 3, which was early to partner with Skype. Of its consumers using Skype, 79 percent were new to 3. Those Skype-using customers also spend more money with 3 than the typical customer. Verizon might be banking on both customer acquisition and average revenue per user upside as well.

 

That will especially be true if a standard phone user upgrades to a smartphone and data plan to use Skype on a mobile. That could easily add $30 a month of additional revenue.

 

This integration with a carrier’s wireless network also enables consumers to use Skype as an always-on service, with no need to plan ahead. Altogether, it is a bit of clever thinking on Verizon’s part.