Wireless VoIP To Merge With Cellular

New York— While the overwhelming majority of VoIP lines in service today are wired, a new report from market research firm In-Stat predicts that wireless VoIP will be a “key driver” in the widespread adoption of the service in both business and consumer markets.

In fact a full 73 percent of worldwide VoIP lines and some 66 million VoIP handsets will be wireless in 2009, up from 2 percent currently, In-Stat predicted.

The spike in wireless VoIP popularity will not be driven by stand-alone VoIP services but by dual-mode phones combining cellular and VoIP capabilities, said Keith Nissen, senior analyst, In-Stat.

“The trend toward smartphones is pushing the convergence of several technologies into a single handset, so integrating Wi-Fi into a handset is going to happen. The question then becomes, 'Is there a market?' and I think there is,” Nissen said.

Wireless carriers will embrace dual-mode products to save on network costs as IP networks are less expensive to operate, Nissen noted. “As much as 30 percent of cellular traffic could be moved” to an IP network, he said.

Those cost savings would then be passed onto consumers in the form of more generous minutes offers or flat-rate calling plans similar to those for VoIP landline services.

Indeed, a recent study from research firm IDATE predicted that wireless VoIP will force mobile operators to offer cheaper calling plans or “all you can dial” fixed-rate plans to beat back lower cost IP competition.

As envisioned by Nissen, dual-mode phones would work seamlessly, automatically detecting a Wi-Fi or cellular network and moving a call between the two with no interruptions. “You would start a VoIP call at home over your Wi-Fi network,” Nissen explained, “and when you left the house the phone would hop on the cellular network until it found another Wi-Fi hot spot.”

The benefit to consumers, Nissen said, was the unification of home and mobile communications into a single device with a single phone number, one voicemail and one address book.

“You'll have the best of both worlds,” Nissen said.

IDATE also pointed to more advanced blessings bestowed by merging IP and cellular: instant messaging from a handset complete with buddy lists that show active users and mobile videophones.

To date, efforts to integrate cellular and IP networks into a single handset have been preliminary and largely targeted toward business users. More than 80 percent of businesses surveyed by In-Stat reported an interest in the technology, Nissen said.

Mass production of dual-mode handsets will begin in 2007, In-Stat reported.

The effort is being led by mobile services in the United States and Europe and not stand-alone VoIP companies, like Vonage or 8x8, whose lock on the VoIP market will erode as dual-mode phones penetrate the market, Nissen added.

“Companies like Vonage have a limited market and will be niche players when faced with the triple play bundles of cable companies and telcos and the power of national brands,” Nissen said. “All they can offer is low cost, fixed-rate plans. Over the long term that's not a big driver,” he said.

Last month, Motorola and Cisco announced a partnership to develop dual GSM/Wi-Fi handset technology, initially for business customers. Motorola has existing agreements in place with other IP providers such as Avaya and Proxim to develop similar technology.

Vonage announced its first Wi-Fi handset, manufactured by UTStarcomm earlier this year, but has yet to make it available. The company has also signed a deal with fixed wireless Internet provider TowerStream to offer its service to TowerStream's customers.