F/MC Watch: Dual-Mode Handset Growth to Explode

While talk of fixed/mobile convergence—phone service that automatically switches from a cellular network to a wireless LAN when one is available—has been much in the news over the past year or so, there hasn’t been much in the way of converged service offerings or dual-mode hardware capable of making this happen.

That’s all about to change, according to a report, The Road to Convergence: Wi-Fi/Cellular Handests Get a Voice, recently published by Scottsdale, Ariz.-based high-tech research firm In-Stat.

The report predicts that by 2010, shipments of cellular handsets with Wi-Fi-based VoIP capabilities will exceed 132 million devices.

According to In-Stat senior analyst Gemma Tedesco, cellular carriers have only recently warmed to the idea of offering converged service. “The carriers have struggled behind the business model of allowing users to switch over to wireless LAN and possibly losing them,” she told VoIPplanet.com.

It took carriers such as BT that offer not only cellular service, but also fixed-line to the home to realize that, covering both flanks, they didn’t in fact risk customer erosion. “The cellular providers that also do fixed line can think of it as freeing up some cellular base stations, pushing people to get on their less expensive voice over wireless LAN network at home,” Tedesco explained.

She sees the residential market as the cradle for the adoption of converged phone service. “So many homes already have a wireless network,” she pointed out. Uptake in the business will probably be much slower. “There aren’t a lot of businesses that have large-scale high-end AP deployments,” she observed. On the device side, “There’s a lot of work that goes into making sure handsets have the same functionality as a business handset. They not only have to work with the WLAN, they also have to work with the PBX.”

Still, over the coming three and one-half years, those problems will be solved, those deployments achieved. While about 20 dual-mode handsets have recently or will shortly reach the market, dozens of others are in development.

“In the end, most U.S. cellular carriers will embrace Wi-Fi in their handsets, as carriers know that if they don’t, other carriers will, and these carriers will likely steal away some of their customers,” said Tedesco’s colleague, Alan Nogee. So, carrier reasoning appears likely to come full circle, from fearing convergence as a possible loss of business to viewing it as a competitive advantage.

Tedesco also mentioned another vector in the trend toward VoIP-enabled wireless telephony: devices that, rather than roaming between cellular and wireless LAN systems, use Wi-Fi to connect to a VoIP service such as Skype. One such is the Skype-equipped PDA E-TEN 600 from E-TEN Information Systems.