Skype for iPhone in heavy demand

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Downloads of Skype's application for the iPhone have reached five million, just a few days after its launch.

The application enables users to make voice over IP calls over the cellular network from their Apple device.

The application has been popular because Skype voice over IP calls are currently free to other Skype customers and cheaper than many mobile operator tariffs for other calls.

Before the launch of the application on Sunday, users could only use Skype on their iPhone when they had access to Wi-Fi.

"We've had millions of downloads to date," Russ Shaw, Skype's general manager for mobile, told Reuters, referring to global iPhone users. "That's really positive."

A Skype spokesperson said the number of downloads of the application was nearly five million by Wednesday morning US Eastern Time.

Shaw said the app saw a good mix of demand across Skype's three main operating regions: Europe, North America and the Asia Pacific region.

However, Skype faced a lot of negative comments after it also said on Sunday that it would start charging for 3G calls between Skype users next year.

This would mark a big change for Skype because Skype became popular because Skype-to-Skype calls were free.

Shaw said the company needs to start charging for the service so that it can fund the investments needed to ensure that the quality of 3G Skype calls stays high.

He declined to give specific details about pricing plans except to say that the service would still be competitive with rival services including traditional cellphone calls.

"We're not going to want to price ourselves out of the market," he said. "I can't ignore the fact that consumers (currently) use us for free."

Skype has struggled to derive revenues from its service, as most users use it for free. Increasing its revenues has been viewed by critics as a major challenge.

At the same time, most operators have been trying to block the use of Skype on their networks, because of the threat to their revenues. Paid-for Skype calls using the iPhone and could placate them slightly.

UK mobile operator 3 is an exception in that it already offers a Skype application on some of its handsets.

Apple is expected to announce a new generation of its iPhone on Monday.

Shaw said Skype would hope to support the next iPhone but had no details about Apple's announcement.

(Additional reporting by Richard Thurston)

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