Inside iPhone 4: FaceTime video calling
Why FaceTime is WiFi only
What FaceTime does on the iPhone is make video chat easy to initiate and use over the Internet, in high quality. In addition to running into the same problems with trying to get video chat to work across NAT boundaries, getting FaceTime to work on the less reliable, limited bandwidth of 3G mobile networks would be too high of a barrier, mainly because mobile networks are currently still vastly expensive to use.
Existing video chat phones that work over 3G networks typically charge between .50 and a dollar per minute, which is not going to fly in mass adoption. Additionally, video calls are certainly not going to work on Apple's home state AT&T network, which is having enough difficulty placing phone calls.
For now, the iPhone's new FaceTime feature is limited to WiFi, with the suggestion that this will change sometime after 2010 and the carriers warm up to the idea and dramatically enhance their coverage while lowering their prices.
However, most people who want to place video calls will be able to access WiFi at their home or office, making the limitation less of an issue. It's also interesting that Apple is pioneering video chat as a VoIP application rather than tethering the service to mobile carriers. That positions the iPhone (and the iPod touch) as potential devices to challenge the voice-centric nature of today's mobile networks. As next generation LTE mobile networks emerge, their IP-based connectivity will likely shift mobile networks from telephony to simply being wide area, broadband data providers.
Apple similarly pushed Internet email on the iPhone in preference to SMS and MMS mobile standards, which continue to charge archaic per message fees wildly out of proportion to the actual amount of data they deliver.
What about Skype and Fring?
The iPhone (and the Mac desktop) already support video calls via Skype. Apple even added support for Skype to run in the background on iOS 4 and enabled Skype to run over the 3G network in addition to WiFi. So why is Apple introducing its own Skype competitor, and one that doesn't work over 3G?
For starters, Apple wanted a video calling app deeply integrated with iPhone 4 features, making full use of both cameras, being uncluttered and "one touch simple," and highly optimized to deliver great picture quality. It also wants to push open standards. Unlike iChat AV and FaceTime, Skype is not open standards-based. It uses an entirely closed, proprietary protocol owned by Skype.
Officially sanctioned client apps that Skype approves for use on its network are closed source. Skype solves the NAT problem and addresses message encryption security in an entirely opaque way. It essentially does not trust the router and uses its own mechanisms for getting through the network.
It claims to use an entirely decentralized system of connected users in a peer to peer network that shares the load between users, rather than being a point to point system like iChat, where a user calls another user to initiate a session. But none of this technology is open to peer review for security vetting nor openly implementable by others.
That makes Apple's alternative to Skype, both on the desktop with iChat and on iPhone 4 with FaceTime, a strategy much like its positioning of open MP3/AAC audio against Microsoft's proprietary Windows Media Audio, or its support for H.264 over WMV, or its support for HTML5 over Adobe Flash for interactive content. In every case, Apple was working to build open interoperability over creating dependance upon a closed standard pushed by one vendor.
Customers who don't understand this saw these strategies as "an attack" on Microsoft or Adobe or Skype, but these efforts actually work to open up markets and enabled Apple and other companies to both compete and collaborate.
The difference with Skype is that, unlike WMA/WMV or Flash, Apple isn't blocking Skype on iPhone 4 or the iOS. Skype isn't a direct competitor pushing its own hardware; Skype provides a product that addresses issues that FaceTime does not (support for earlier phones and 3G calls); and Skype is both already finished and functional and entrenched as a player in the mobile market.
Other iPhone VoIP apps, such as Fring, support both Skype's proprietary protocol and can support alternative open network protocols such as SIP. That makes it likely that Fring or other companies could actually create multiple-network VoIP apps that support both Skype and the standards-based FaceTime.