Microsft has confirmed that third-party developers do not currently have accces to the video camera functionality in Windows Phone 7.
Third-party developers can only access the camera for simple picture taking. Video camera access has been omitted from the available development tools.
Third-party developer Fring also confirmed the lack of access to the application programming interface (API) of the camera in the Windows Phone 7 OS. It is currently preventing it from porting the popular voice and video chat software over to Windows Phone 7.
This major omission blocks the development of any application that needs access to the video camera. In other words, no third-party video chat, augmented reality (like the popular Layar)or even enhanced video recording applications.
Microsoft will need to update the Software Development Kit (SDK) to enable access to the camera API for the situation to change in the future.