Skype's iPhone limits irk some consumer advocates

— -- Apple's aapl unique treatment of the new Skype Internet calling feature on the iPhone — the free app works only on Wi-Fi, not the cellular or 3G network — is raising concern among public-policymakers and consumer advocates.

They say it's a clear example of AT&T t, the sole carrier of the iPhone in the U.S., trying to handicap a direct competitor.

"Consumers will pay the price for AT&T's blocking," says Chris Murray, senior counsel to Consumers Union. By using Skype on the iPhone, consumers can sidestep AT&T, allowing them to get by, potentially, with cheaper voice plans that offer fewer minutes. Consumers can also save a bundle on international calls.

Technically, the limitation on Skype and other Internet phone companies is imposed by Apple, which has similar arrangements with other carriers.

Apple spokeswoman Jennifer Bowcock says the company "has always said" that Internet phone applications for the iPhone and iPod Touch would be limited to Wi-Fi but declined to elaborate.

Jim Cicconi, AT&T's top public policy executive, says AT&T has "every right" not to promote the services of a wireless rival.

"We absolutely expect our vendors" — Apple, in this case — "not to facilitate the services of our competitors," he says.

"Skype is a competitor, just like Verizon vz or Sprint s or T-Mobile," he says, adding, Skype "has no obligation to market AT&T services. Why should the reverse be true?"

Murray says logic like that "highlights the urgent need for Congress and the Federal Communications Commission to clarify that the wireless Internet will be open just like the regular Internet." Unlike the land-line business, wireless is largely unregulated. The loophole owes to the origins of wireless, which began decades ago as a high-end business service.

Now that millions of consumers are cutting the cord and going wireless, it may be time to revisit some of those rules, says acting FCC Chairman Michael Copps. "In the fast-changing world of technology, you have to constantly revisit the rules and regulations to make sure they're in accord with the real world."

Skype, for its part, is glad to finally get a spot on the iPhone. Still, the company finds the Wi-Fi limitation "frustrating." If iPhone users wander too far from Wi-Fi, they'll lose the Skype connection.

"It would be a better experience, obviously, if we could go to wherever the network is strongest," says Scott Durchslag, Skype's chief operating officer.

Is the Wi-Fi only limitation of the new Skype app a hassle, or not?

Would the service be more attractive if AT&T carried it over cellular and 3G networks, as well?

Tell us about it by posting a comment below.