WIFI Versus Cellular: The battle lines shift

The Wi-Fi Alliance has certified nearly 100 WiFi phones since 2004, and dual-mode handsets are now a reality rather than something that could be brushed under the carpet by the big fixed-line operators. But Terry Martin reckons the networks are dragging their feet …

 Web telephony provider Skype has recently asked the US Federal Communications Commission to force carriers to open up and allow hardware and software created by third parties to connect to their networks.

It cited the Carterfone rules, which were enacted in the 60s to force AT&T and operators to allow devices other than those provided by the AT&T to connect to the network. The FCC has applied the rules to cable and DSL communications and it would be logical to enforce it on mobile networks too.

In true open-minded Finnish style, telephony giant Nokia has announced it is ready to cooperate with Skype if the other operators follow suit and allow mobile VoIP traffic.
Whether they follow this lead and fall in line remains to be seen. Nokia has a very different attitude that the others can sometimes lack. The US mobile operators’ association CTIA has completely opposed Skype’s request, stating that this is in Skype’s own interest and has a complete disregard for the vast consumer benefits provided by the competitive marketplace of today.

VoIP puts on the squeeze
This is the sort of response to be expected from carriers feeling the pressure from rival VoIP providers. Certainly WiFi on mobile phones is one of the most significant technological advances in recent years. And with players like BT and T Mobile promoting WiFi Mobile technology, it is clear the big names are waking up to the elephant in the corner … even if they are still reluctant to fully embrace the challenge it presents.

Mobile phone companies have traditionally based their ambitious RoI numbers on charging exorbitant rates to users calling from overseas. And we can see why. For example, calling a UK landline number from abroad on one of the mobile networks currently costs around 70p per minute. Charges of around 60p per minute are also incurred for receiving calls.

Consider that the same call on VoIP costs approximately 2p per minute outbound and is free for inbound calls: it is obvious why VoIP has made mobile carriers sit up and take notice.

End users are waking up to this discrepancy and pressure for change is mounting from high profile industry figures such as the EC’s Vivienne Reding.

Add the increasing pressure brought on by the new wave of VoIP telecoms providers to the mix, and the new battle lines become even more apparent. Vodafone and others need to undergo as radical a transformation as BT has done. VoIP service providers have long been predicting that customers will not stand for the high roaming charges that the big telecoms suppliers have been setting.

Why is VoIP such a threat?
Because it represents a huge opportunity and the potential to move away from mobile tariffs altogether. Stats from Infonetics Research claim that WiFi handset sales over the next four-years are forecast to increase nearly 1,300%. Why? The simple response is because VoIP phones enable users to use the internet to make vastly cheaper calls.

Potential in SMEs
The take up for cost saving technology and services on a noticeable scale usually comes from the SME market. This sector needs flexibility and scalability in order to grow and, therefore, succeed.

The benefits of web calling to SMEs are significant:
•    No expensive equipment
•    No yearly maintenance contracts
•    Flexible user configuration
•    ‘Free’ internal communication for remote workers
•    Lower call costs

A further progressive benefit of VoIP is that it can streamline office technology. Instead of having a desk phone and a mobile, the new wave of WiFi Mobile phones combines the benefits of both – and can be reached around the world.

Thanks to automatic switching between mobile SIM and wireless networks, the remote worker can make calls over a network when in range, or a mobile network when not.

Pure play VoIP companies can steal a march on carriers with cosmetic offers to try and deflect criticism from costly calling charges. Carriers have a long way to go to match the new wave of internet telephony. Nokia may well have proved to be the most forward thinking of the bunch in complying with Skype’s request. I fear though that we are a long way off the others following its lead.

Terry Martin is CEO of VoIP provider Coms – which unlike Skype, will work on all devices that support the SIP protocol: and which uniquely lets each customer select their own free UK personal number.

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