It was not long ago that Neowin broke the news about Microsoft's FaceTime competitor, but since we broke the news, a bit more information has come across our inbox and shines a bit more light into the details of the application.
As Neowin previously showed, WP7 has the built-in calls for a front facing camera. According to our source, the intent was to launch WP7 with the front facing camera requirement and the application to provide a more direct competition to Apple. But as the deadline drew near, Microsoft became aware that WP7 was falling behind schedule and instead of delaying the release the product, they had to start slashing features.
Did you ever wonder why the Copy & Past cut came near the end? It is because this simple idea, while not hard to implement, was near the end of the feature requirements for Microsoft. Because of this, C&P was pushed back a bit further, which is why it will land most likely in the next month or two. But how does this relate to the FaceTime competitor? From what Neowin understands, the application development was never stopped, only the implementation into WP7 was cut. So while WP7 doesn't have the featureset, it is almost certain that the application will be included in WP8.