Cell Phone Industry Steps Closer to VoIP

LAS VEGAS -- Wojtek Felendzer held a mobile phone to his ear as he walked across the room, the call automatically switching behind the scenes from a Wi-Fi wireless hotspot to the regular cellular network.

"Can you still hear me?" the Nokia Corp. employee asked.

"Yes," the reporter answered.

"That's good," he said. "This is seamless handover. The voice didn't drop. Nothing bad happened."

While Felendzer took only a few steps, his demonstration at the CTIA Wireless 2006 conference here proved that mobile Voice over Internet Protocol, or VoIP, technology has made a meaningful step forward.

For years, Wi-Fi telephones and walkie-talkie-like communicators have been available for hospitals and offices. Now, manufacturers and mobile carriers are preparing to link standard cellular networks to the mishmash of Wi-Fi hotspots, a move that will expand coverage and perhaps make cheaper mobile minutes a reality.

The technology, called Unlicensed Mobile Access, or UMA, will help those who have high-speed Wi-Fi routers overcome any poor coverage in their houses or apartments. It's also a way for mobile carriers to expand their footprint without spending lots of money on new infrastructure.

UMA could enable users of souped-up handsets to wirelessly download content at broadband speeds at home and take that on the road when they leave.

"Everything from multimedia to audio, video -- when you look at the capabilities of phones now, the options expand pretty quickly," Nokia spokesman Eric Estroff said.

At the conference in Las Vegas last week, Samsung Electronics Co. Ltd. unveiled its t709 phone capable of seamlessly accessing Wi-Fi and cellular networks. Nokia's 6136 and Motorola Inc.'s A910 were introduced in February at a conference in Spain.

ABI Research expects the market for Wi-Fi enabled mobile handsets to reach 100 million units annually by 2009.

Carriers in Europe have expressed interest. France Telecom SA has said it will be Nokia's first European customer for its UMA phones, while Nordic operator TeliaSonera AB said in February it is moving ahead with trials for business customers.

But U.S. carriers were tightlipped about when they might roll out the service and at what price, despite Nokia and Samsung representatives saying they would start selling functioning handsets in the country this year.

T-Mobile USA, a unit of Deutsche Telekom AG, was widely expected to be among the first by tapping its 7,400 Wi-Fi hotspots at hotels, airports and Starbucks coffee shops nationwide.

Its logo also adorned Samsung's new model on display here, but a T-Mobile USA spokesman said the company had no comment.

Cingular Wireless LLC, jointly owned by landline giants AT&T Inc. and BellSouth Corp., said it was looking at the technology and already supports a personal digital assistant that receives data on Wi-Fi and cellular networks.

But analysts said Cingular is concerned that offering Wi-Fi calls inside a home could hurt its parent companies' landline businesses.

Plus, there's the question of how to charge customers, who might expect free calls.

"Pricing is always an issue," said Cingular spokesman Ritch Blasi. "Who's network are you going to be using, and do you share minutes? ... People might expect that because they're calling on a Wi-Fi that they're paying for a broadband connection into their home already."

But such offerings could help traditional landline phone companies retain customers who are increasingly using VoIP phones enabled by eBay Inc.'s Skype or Vonage Holdings Corp., industry executives and analysts say.

"This is a proactive response from them to get out of this threat of Voice over IP," said Steven Shaw, director of marketing for Kineto Wireless, a Milpitas, Calif.-based company developing UMA technology.

"You see this giant bucket of minutes called fixed-network minutes going toward zero because of Skype and Voice over IP," he said. "You've now got the option to take those minutes and put those on the mobile network as fast as possible. That's what UMA does."

UMA works by tunneling cellular information packets through the Internet when Wi-Fi is available and reverting to cellular towers when it is not. A back-end controller inside the network makes the switch.

Voice minutes over Wi-Fi networks are far cheaper than minutes on cellular networks because they use free radio spectrum and the Internet and do not require large cell towers.

Nearly 200 U.S. cities have announced plans to offer Wi-Fi hotspots free of charge. Last week, Google Inc. and EarthLink Inc. became the leading bidders for building a Wi-Fi network in San Francisco, a project that would make it the largest city in the nation to offer a free service.

Frank Hanzlik, managing director of the Wi-Fi Alliance, a global nonprofit industry group, said cost savings will drive growth in Wi-Fi-enabled mobile phones.

"They're keeping you connected in the best way at the lowest cost. And that's really good for the consumer."

But he said technical and business issues may slow progress. Some raised concerns that users with computer-like devices may be able to switch voice carriers once they get Wi-Fi access.

"It's not going to be for everyone and it's not going to happen overnight," Hanzlik said. "This is absolutely a journey and it's going to take place in several steps."


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