WiFi/Cellular Phones Will Face Uphill Battle For Consumers
Many people sound the death knell for mobile phone carriers when they hear about WiFi VoIP telephony. The assumption is that since VoIP calls are cheap, and WiFi clouds “will cover every metro area quite soon” that people will substitute VoWIFI calls for cellular ones. We’ve had our doubts for some time about this, based largely on the actual present and future coverage of WiFi networks, the price of the unsubsidized handsets, and the poor quality of VoWiFi (for more on quality, click ‘read more’). But some of the problems faced by VoWiFi will erode over time, so should we conclude that eventually it will be a mass market winner? No, because as VoWiFi evolves, it’s safe to say that the cellular carriers won’t stand still. A recent study from Tayler Nelson Sofres/Analysys Research shows that carriers are likely to fight back at WiFi FMC solutions with lower cellular prices in the home, and that most consumers will prefer the cellular-only phones. While the fixed carriers and VoIP shops are pushing FMC, the mobile companies are pushing FMS, the substitution of a mobile phone for a fixed phone. In the EU, carriers are doing this by offering “home-zone pricing”, which discounts calls made in range of the home cell tower. While this is the EU tactic to push FMS and fight FMC, the USA equivalent is our large buckets of monthly minutes, ~78% of which go unused each month. With paid but unused minutes, there’s little consumer incentive to move calls over to a “cheap” WiFi network. We have said long ago that WiFi phones were interesting, but that they would be limited to a niche market in enterprises who could systematically deploy them, and benefit from lower costs. VoWiFi has come along since we started discussing it, but we stand by our earlier conclusions that it will not be a mass market mobile phone solution. (Note: We’re only talking about VoWiFi here. VoIP over some kind of WWAN will be mass market in the future, but not using current WiFi standards.)
