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Has Microsoft Declared War on Carriers?

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It's been a little over a week since Microsoft announced its acquisition of Skype for the princely sum of $8.5 billion. Since then, analysts have come down on either side of the deal -- some approve, others oppose. Eric Jackson at Forbes listed a multitude of reasons why the buyout was good for both parties, while Minyanville's own Professor Pinch referred to it as Microsoft's failed and costly attempt to stay relevant within the consumer's internet.

But putting whether or not Redmond reaps the rewards of a good investment aside, what was the main incentive behind Microsoft paying top dollar for the VoIP service? Mozilla designer Kevin Fox makes the case that Microsoft is trying to topple the kingdom of carriers.

As a manufacturer, Microsoft shares the woes with Motorola, HTC, Samsung, and the like with having to deal with these powerful middlemen. Mobile providers dictate how and when updates are rolled out, how many unnecessary apps are forced into the OS, whether cutting edge features could even be enjoyed within capped data plans, etc. As Fox points out, "Mobile carriers make their money either way, and 'innovation' comes down to increasing the bottom line, whether it's charging $1,300/megabyte for text messages or adding 20 seconds of instructions on how to leave a voicemail so that the carrier might get an extra minute's revenue."

Bottom line: In the smartphone industry, designers progress technology and carriers monetize it.

But like Apple's FaceTime push and Google's heavy integration of Google Voice in Android devices, Microsoft appears to be fighting the stranglehold carriers have over mobile calls by shifting focus to web-assisted communication. Rather than deal with the cost of building and maintaining cellular towers with antiquated protocols, this new Skype integration could rely on Wi-Fi connections when available and fall back onto a carrier network when they aren't.

And since many calls occur within the range of a Wi-Fi signal, that could be a huge blow to carrier necessity.

Fox maps out a scenario where a "soft carrier" like Skype would have much lower costs with Wi-Fi:

"If over half of a soft carrier's airtime minutes were carried over Wi-Fi rather than a leased cellular network, that carrier could beat a traditional mobile carrier on price even if the traditional carrier doubled their costs when they leased access to the soft carrier, and for every customer who only has 3G access there's another who has almost exclusively Wi-Fi access, and over time the scales continue to tip toward the latter, steadily lowering soft-carrier costs. Rates could either be flat regardless of transport, averaging out the benefit to all customers, or discounts could be given to those who use Wi-Fi more often."

And if Microsoft does decide to buy Nokia as rumors have been hinting, this roadmap looks ever-more enticing.

With this system in place, consumers could finally move away from the ridiculously outdated process of placing a call over a cellular network. Never knowing before making a call whether the person is free, present, and willing to chat -- unlike, say, an AIM or GChat status. Having to pay (comparatively) an arm and a leg to send 160 characters when a lengthy email is essentially free. And dealing with one dropped call after another.

I'd love to see Microsoft regain some swagger and -- maybe with a little help from Apple and Google -- start putting a little fear in the oil companies of the smartphone world.

(See also: Microsoft Shares Drop After $8.5 Billion Skype Deal and No 4G iPhone This Year)
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