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With the increasingly rapid rollout of VoIP telephone service from cable providers, telcos and start-ups such as Vonage, a new iteration of the service will use wireless 802.11 (or Wi-Fi) networking to free telephony from wired modems and wired phones.
Early entrants into the market will be Net2Phone, Viper Networks and Vonage.
The underlying functionality of Wi-Fi VoIP is identical to standard VoIP: Voice calls are converted to data packets that are then sent over the Internet and finally onto the public switched telephone network. Current consumer VoIP solutions require an adapter to be connected to a broadband modem and regular home phone, or in the case of cable MSO-provided VoIP, an adapter installed at the point where the phone line hits the house.
In the case of Wi-Fi telephony, the adapter will be built directly into the handset, allowing the phone to automatically convert voice to data packets that are transmitted to the Internet via an in-home or in-building wireless network or via a public wireless hot spot.
Wi-Fi will deliver greater portability for VoIP users, letting consumers bring the phone to hot spots or wireless networks across the country, although it cannot offer the true nationwide service of a mobile phone, said Sarah Hofstetter, senior VP of Net2Phone.
"It is the difference between mobile and portable," Hofstetter said. "Wi-Fi VoIP will be portable but not truly mobile."
The first residential Wi-Fi VoIP service was inaugurated by Newark, N.J.–based pre-paid phone company IDT, which began in May to test its Wi-Fi VoIP solution in the ironbound area of Newark, N.J. The prepaid service, which uses the VoIP technology of IDT spin-off Net2Phone, is being marketed as a low-cost alternative to traditional landline phone service. IDT, which is initially offering the handsets free of charge to its Wi-Fi VoIP subscribers, is offering wide-area Wi-Fi coverage in the area so users won't have to install an in-home Wi-Fi network.
Net2Phone's Hofstetter said the company will offer its Wi-Fi VoIP solution to all of its cable MSO and telecom partners, so Wi-Fi VoIP could hit several more markets before year's end.
Vonage will also enter the Wi-Fi telephony market, though it will court a different demographic than IDT. Vonage will be seeking early adopters who own their own wireless home networks. By the fourth quarter, Vonage will offer a Wi-Fi-enabled handset on its Web site. It will use the same calling plans as its existing broadband phone.
Vonage wants to capitalize on what executive VP of operations Michael Tribolet said is the growing adoption of Wi-Fi. According to Pyramid Research, there will be more than 700 million Wi-Fi users globally by 2008.
"We see Wi-Fi VoIP as giving home network users another value-added application," Tribolet said.
The Wi-Fi VoIP phone will complement Vonage's current broadband phone offering, which connects a regular home phone to a multi terminal adapter (MTA) that in turn is connected to a cable/DSL modem. While the current offering can work with a cordless phone if the cordless-phone base station is connected to the MTA, Tribolet said the Wi-Fi phone will incorporate the adapter in the handset, giving consumers one less piece of equipment to install.
"We can offer quality of service [IP calling] right in the handset," Tribolet said.
The company is currently evaluating handsets from "several" manufacturers with form factors ranging from a "traditional cordless phone" to a more exotic cell phone, Tribolet said.
While the phone will be able to work at any hot spot, Vonage envisions the initial usage will be largely confined to the home. Pricing for the handset has not been determined.
Hardware provider Viper Networks, which operates a VoIP network and sells USB-based handsets for VoIP calls placed through a computer, is also finalizing a Wi-Fi phone to sell on a prepaid basis by the end of year. Users will refresh calling minutes through Viper's Web site.
Initial sales of Viper's Wi-Fi handset, the details of which have yet to be publicly announced, will be direct through Viper's Web site, with the potential for a future retail rollout, said Ron Weaver, president of Viper Networks. The company test marketed its wired USB VoIP phone through CompUSA.
"Right now the main use for Wi-Fi VoIP is in niche vertical markets," said Phil Solis, senior analyst at Oyster Bay, N.Y.-based ABI Research. The applications are generally for enterprise-level users who enjoy low-cost IP calling but need portability within an office space.
Solis said Wi-Fi telephony's most promising avenue would be in conjunction with cellular phones. A "dual mode" phone that could switch between a cellular network and a Wi-Fi hot spot would principally serve to patch cellular "dead spots" in residences where cellular coverage is notoriously spotty, Solis said.
However the back-office coordination and cooperation between carriers, handset makers and wireless Internet service providers necessary for a "dual mode" cellular/Wi-Fi phone are considerable, Solis said.
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