The iPod Touch can become an iPhone with a Jajah VoIP app

As you might recall, I bought and then returned an iPhone 3G because my experiences with the AT&T service were so bad. A lot of readers said I made a bad decision but suddenly, I'm feeling redeemed - like I may have made a smart move.

Jajah, an Internet-telephony communications company, is announcing today the availability of an application that would turn a WiFi-connected iPod Touch into, well, an iPhone - an iPhone, that is, that doesn't require a monthly bill and two-year service contract.

But don't go running to the iTunes App Store in search of a Jajah app just yet. This will be a white-label app for wireless companies interested in selling a low-cost, WiFi-only VOIP service plan along with the app. Jajah expects to see the first rollout by a wireless carrier as early as this summer and thinks that monthly service plans will run in the neighborhood of $10-$20.

While Jajah CEO Trevor Healy wouldn't say which companies might be the first to roll out it, he did say that there's been greater interest in the service from partners in Europe and Asia than there has been from carriers in the U.S.

Before anything can happen, however, Apple has to give its OK for the release of such an application. I can't imagine that the wireless carriers that provide phone service to the iPhone - AT&T, Orange and others - will be too happy about such an app. But would Apple be willing to squash or delay the release of such an app to keep their wireless carrier partners happy?

After all, for Apple, the app could unexpectedly drive sales of the iPod Touch. Economic conditions have changed drastically since the launch of the iPhone and, if last quarter's sales figures were any indication, iPhone sales are also slowing. But Apple's last quarterly report also noted that iPod sales exceeded forecasts.

While Apple doesn't break out numbers specific to the different types of iPods it sells, the question of whether iPod Touch sales have been cannibalizing iPhone sales has been raised. For me, that was the case. And I remain convinced that the iPod Touch is the more important product for Apple's future.

Back to Jajah, Healy doesn't believe that his app would be a real threat to the iPhone model. Because the Jajah service only operates on WiFi, there's truly limited phone service, compared to a mobile phone.

But he also sees potential for it to grow as a second-phone model that offers better value for specific users, such as cash-strapped college students who spend most of their time under the blanket of campus-wide WiFi, business travelers who spend a lot of time connected to hotel WiFi networks, international callers who could save money by dialing over the home WiFi connection and road warriors who spend their days ducking in and out of WiFi hotspots.

It may not be available in the U.S. yet, but when a wireless carrier does make that Jajah app available, you can bet that I'll be one of the first iPod Touch owners to download it.