The fight for Skype has ended. After weeks of nasty legal sparring, the Internet telephony service’s founders agreed to join the investor group purchasing it from EBay (EBAY) and dropped the lawsuit that had threatened to bollocks the deal.

“Skype will be well positioned to move forward under new owners with ownership and control over its core technology,” said eBay chief executive John Donahoe in a statement. “We look forward to closing the deal and focusing on growing our core e-commerce and payments businesses.”

Under the terms of the agreement, Skype founders Niklas Zennström and Janus Friis will take a 14 percent stake in the company they founded and then sold to eBay, which will include an investment by them.

BoomTown’s Kara Swisher reported yesterday that the total was 13 percent–10 percent for the rights to key Skype technology held by the founders and the option to invest $83 million for three percent more.

In exchange, the pair will give Skype software essential to its operation and drop their various lawsuits against eBay and Skype buyers.

Interestingly, Index Ventures, which helped orchestrate the deal, is leaving the consortium of investors taking a majority stake in the company–as BoomTown reported earlier this week. Index partner Michelangelo Volpi, a former employee of Skype’s founders, had been at the center of one the suits that threatened to ruin the deal. Said Index partner Danny Rimer: “The deal terms changed for Index such that it no longer matches our investment criteria and thus we have decided not to participate in the transaction.”

PREVIOUSLY:

• Volpi and Index Ventures Out of Skype Deal, the Lawsuit-Happy Founder Twins In
• I Love the Smell of Settlement in the Morning: Skype Founders Set to Get 10 Percent, Option to Buy Three Percent More and Two Board Seats
• Volpi and Index Smack Back at Skype Founders With Motion to Dismiss (Plus Filings!)
• When Entrepreneurs Attack! All 10 New Skype Lawsuit Filings!
• Dueling Skype Sides Hire Big Communications Guns
• Skype Actually a “Voice Over IP Litigation” Service

Though the carrier’s decision to allow Internet telephony apps on its 3G network has lead some to speculate that the company will soon allow data tethering as well, that’s not the case. Evidently, there’s still a while to wait until AT&T (T) supports that long-promised feature, which it fears might exponentially increase network traffic and undermine sales of air cards.

Asked if AT&T’s new policy on Internet telephony apps heralded the arrival of iPhone tethering, a company spokesman repeated the same tired line we’ve been hearing for months now: “Whenever we offer new features, we want to offer the best possible customer experience. For tethering, we need to do some additional fine tuning to our systems and networks so that we do deliver a great experience.

And perhaps that’s for the best given the widespread complaints over the quality of AT&T’s network prior to iPhone tethering. If it’s as poor as some claim now, how poor might it be when Apple’s (AAPL) iPhone users begin tethering their MacBooks to it?

“We are very happy that AT&T is now supporting VOIP applications,” said Apple (AAPL) spokeswoman Natalie Kerris. “We will be amending our developer agreements to get VOIP apps on the App Store and in customers’ hands as soon as possible.”

But the new policy hasn’t gone over well with AT&T investors. Shares in the company slipped on the news yesterday and they’re falling still further today. AT&T (T) is trading at $26.21 as I write, down more than two percent from its open. Why? Perhaps due to concerns that the carrier might take a revenue hit when iPhone owners who are using telephony services to make cheap calls switch to low-minute voice plans.

As JP Morgan analyst Mike McCormack notes, voice accounts for $50-$60 of the $95 in monthly revenue generated by the typical iPhone user. If the average user were to drop AT&T’s unlimited voice plan ($99.99/month) in favor of its cheapest ($39.99/month), the carrier could lose upward of 20 percent of voice revenue.

That’s an ugly drop. And while AT&T might offset it by raising its data plan rates, doing so would inevitably outrage customers who are already giving it hell for poor coverage and lousy call quality.

“iPhone is an innovative device that dramatically changed the game in wireless when it was introduced just two years ago,” AT&T Mobility and Consumer Markets chief Ralph de la Vega said in a statement. “Today’s decision was made after evaluating our customers’ expectations and use of the device compared to dozens of others we offer.”

It was also doubtless made after evaluating Verizon’s (VZ) announcement this morning that it will begin offering phones running Google’s (GOOG) Android OS and its Google Voice app in a matter of weeks. I’m sure that Federal Communications Commission investigation was “evaluated” as well.

Anyway, good news for consumers–assuming AT&T’s network can handle the additional strain, which is anything but a sure thing at this point.

UPDATE: The VoIP community was quick to congratulate AT&T for the move. “All of us at Skype applaud today’s announcement by AT&T (in an FCC filing to be published shortly) that it’ll open up its 3G network to Internet calling applications such as Skype,” Skype CEO Josh Silverman wrote in a post to the company blog. “It’s the right step for AT&T, Apple, millions of mobile Skype users and the Internet itself. Nonetheless, the positive actions of one company are no substitute for a government policy that protects openness and benefits consumers. We’re all looking forward to further developments that will let people use Skype on any device, on any network.”

Interesting, given the recent flap over Google Voice for iPhone, which Apple (AAPL) hasn’t yet allowed into its iTunes App Store because it “appears to alter the iPhone’s distinctive user experience by replacing the iPhone’s core mobile telephone functionality and Apple user interface with its own user interface for telephone calls, text messaging and voice mail.”

How is Vonage’s (VG) app different? Its features and functionality are certainly very similar to those of Google Voice.

Apple won’t say, but the company did tell the Associated Press that Vonage’s app falls under the same category as other VoIP applications that have already been approved for the iPhone.

And now this: eBay’s plans to spin off Skype next year are being threatened by a legal dispute over the telephony service’s underlying technology.

In a 10-Q regulatory filing Thursday, the online auctioneer said it is developing an alternative to that technology, which it licenses from Joltid, a company run by Skype co-founders Niklas Zennstrom and Janus Friis, but there is no guarantee of success. And if it fails in that effort and its legal dispute with Joltid drags on, eBay could be forced to shutter Skype.

“Although Skype is confident of its legal position, as with any litigation, there is the possibility of an adverse result if the matter is not resolved through negotiation,” the company said. “Skype has begun to develop alternative software to that licensed through Joltid. However, such software development may not be successful, may result in loss of functionality or customers even if successful, and will in any event be expensive. If Skype was to lose the right to use the Joltid software as the result of the litigation, and if alternative software was not available, Skype would be severely and adversely affected and the continued operation of Skype’s business as currently conducted would likely not be possible.”

That doesn’t bode well for eBay’s plans to take Skype public in the first half of 2010. Though the company insists its plans to separate the telephony service have not changed, it’s clear that eBay (EBAY) must resolve these issues before moving ahead.

Certainly, it will be difficult to gin up investor interest in an IPO for a disabled service run by a company that spent billions of dollars to purchase it and failed to secure its underlying technology.

“If you’re selling something or running a campaign–if you want to do that in the traditional world, then you would set up an 800 number, for example,” Stefan Oberg, the head of Skype’s business division, told ZDnet. “But 800 numbers are local to a country. So if you’re an international business, you have to set up 800 numbers in many countries. Now a company can have a button on their webpage or refer to Skype in an ad, and it’s like a virtual, global 800 number.”

As I said, a compelling proposition. But will enough companies take Skype up on it to really cause a significant increase in revenue? Particularly in a market as competitive as business communications? A market in which traditional phone companies are already peddling their own VOIP offerings?

Q: You said in the past that a CEO should probably serve 10 years. You’ve served eight. What are your plans? Will you follow your own advice?

A: The first piece of advice I wish someone had given me as a freshman CEO is to keep your mouth shut. Somehow I didn’t get that advice, which is don’t talk about when you’re coming or when you’re going because it just creates a set of questions that probably aren’t productive.

–eBay CEO Meg Whitman, San Francisco Chronicle, Nov. 19, 2006

Looks like eBay CEO Meg Whitman may make good after all on her pledge that no CEO should stay more than a decade. Whitman, the public face of eBay for the past 10 years, is reportedly preparing to retire. She has been delegating more tasks to deputies over the last few months and is expected to decide on her retirement in the coming weeks, The Wall Street Journal reports, quoting “people familiar with the matter.”

John Donahoe, who joined eBay in 2005 to lead its auction business unit, is the leading candidate to succeed her.

Rumors of Whitman’s imminent departure come at a critical time for eBay. The company is due to report earnings for the fourth quarter tomorrow. And though this quarter includes the traditionally strong year-end holiday period, it will likely be marred by a general slowing in eBay’s core auction business and the company’s continued struggles with Skype, the Internet telephony outfit for which it recently took a $1.4 billion write-down.

So perhaps it’s a perfect time for Whitman to step aside. Certainly she leaves a storied career behind her. She led the company through its 1998 initial public offering, and from there through some 40 quarters of sequential revenue growth. An impressive achievement by any measure–Skype acquisition be damned. Now, maybe it’s time to move on to bigger things.

Much bigger. Like perhaps a position in the cabinet of friend and Republican presidential candidate Mitt Romney (shown below, left, with Whitman and VC Steve Jurvetson)? Whitman can’t be suffering through those Romney fund-raising telethons for nothing, right?

Still, the Silicon Valley start-up, which officially opened its Web-based telephony platform to third party developers this morning, is generating a lot of buzz for its Flash/Flex-based telephones (see video below), and rightly so. The company has essentially built a software version of an operator-class telephone switch that connects Internet-based voice communication services with mobile and landline phones and other Web-based phone applications.

Using its Ribbit API, developers can write applications that support full telephone capabilities–voice mail, call-logging, text-to-speech transcription services, etc.–and because they’re Flash/Flex-based, they can be embedded into Web sites and integrated into Web-based services.

“What we have done is made voice an object that you embed into your workflow (or software),” said Ribbit CEO Ted Griggs. “We didn’t want to change how people did things, like communicate via Skype, and wanted to integrate the platform to work with any phone.”

Smart, eh? But how’s the company going to make money? Ribbit says it plans to charge for services like calls to traditional landlines, voice-mail transcriptions and billing. A reasonable plan, but as Ovum analyst Brett Azuma notes, an unproven one. “Unless there’s a foolproof way to get the products out there and make them successful,” Azuma told Wired. “I think the consumer applications are a little unclear for now. Being able to use text-to-speech transcription services and archive voice calls are many of the features that consumers have shown interest in over the years. However, whether or not they’re willing to pay for these features is going to be the big question.”

These patents are invalid. We don’t owe them a dime.”

–Some famous last words from Vonage lawyer Louis Jameson, Sept. 21

If things truly are destined to get worse before they get better, then Vonage may have something to look forward to. Yesterday afternoon the Internet telephony company suffered another costly legal defeat when a federal jury ordered it to pay $69.5 million in damages and a 5% royalty on future revenues to Sprint Nextel for using its patents.

It’s an ugly turn of events for the long-suffering Vonage, which has been beaten mercilessly into submission by legal setbacks since it went public in May 2006. Back in March, the company lost a similar patent-infringement case to Verizon and was ordered to pay more than $58 million in damages and a 5.5% royalty on future revenue.

Vonage was, obviously, dismayed by yesterday’s ruling and plans to appeal. “We are disappointed that the jury did not recognize that our technology differs from that of Sprint’s patents,” Sharon O’Leary, chief legal officer for Vonage, said in a statement. “Our top priority is to provide high-quality, reliable digital phone service to our customers. Vonage has already demonstrated that it can keep its focus on customers and on its core business while managing ongoing litigation.”

Question is, does Vonage have enough money to maintain that focus? As of June 30, it only had $344 million in cash. Of that, $66 million is restricted cash used as collateral for the Verizon bond. Now it may be down another $69.5 million. And who knows what sort of financial damage it might suffer from the 14 purported class-action cases against it over its initial public offering. No matter how you spin it, things are looking pretty bleak.

“Poor Vonage, they can’t get a break,” TeleGeography analyst Stephan Beckert told Bloomberg. “I don’t think it’s any secret that they’re not a well company.”

The deal places Skype and other hosted VoIP services into the mainstream spotlight and may even bring them a huge crop of new users. I say “may” for two reasons. First, bargain-hunting small-town America, where Wal-Mart does a great deal of its business, isn’t exactly technologically adventurous. Will it embrace Skype? Will it even notice it? Second, Wal-Mart’s been reporting lousy financials for a while now. America may still shop at Wal-mart, but from the looks of the company’s earnings reports, it isn’t buying much–even at price points that make it feel like it’s getting the deal of the century.