A NEW version of the free iPhone application for Skype SA will let users make and receive video calls.

Users of the Internet calling and messaging service will be able to use both Wi-Fi and AT&T Inc's 3G cellular network. FaceTime software, which comes with iPhones, works only with WiFi.

The app, which was being released in the United States yesterday via Apple Inc's iTunes Store, will let iPhone 4 and iPhone 3GS users make free video calls to other Skype users who are using the app or have access to the feature using Skype on their computer or other video phone.

Those with the latest iPod Touch will be able to make video calls over WiFi. The app allows the iPad and previous-generation iPod Touch to receive video calls, too, Skype said.

Skype's software offers free services such as voice or video calls to other Skype users.

Users pay to do things such as make calls from a PC to a landline or cell phone.

In the first half of 2010, video calls made up 40 percent of all minutes spent using Skype's free calling services, the company said.

The iPhone 4, which was released in June, was the first iPhone to include a front-facing camera for video chat. It includes FaceTime, which enables users to make video calls to others who have the iPhone 4, the latest iPod Touch or a Mac computer. But so far, FaceTime doesn't work over the cellular network and doesn't allow calls to Windows-based computers.

Skype, which is based in Luxembourg, is not the first third-party app for the iPhone to allow free video calling over AT&T's cellular network. Apps such as Fring and Tango offer the capability as well, although neither has as many users as Skype.

The updated app comes about a week after Skype suffered a major service outage that lasted 24 hours and cut off service for millions of users. On average, 124 million people use Skype each month. Skype's chief information officer, Lars Rabbe, said the problem was caused by a bug in a version of Skype's software for computers running Microsoft Corp's Windows operating system.