Wi-Fi / Cellular Converged Devices: When Is The Tipping Point?

Some people have been heralding the coming of hybrid devices that combine Wi-Fi VoIP with cellular for many years, but so far, their impact has been minimal. A recent conference in Amsterdam heard from a group of telco execs who had experimented with dual-mode offerings, and the conclusions were: “Operators have trouble finding customers for combined deals offering fixed and mobile services.” Apparently, despite market offerings, consumers are disinterested in the services that offer few handset choices and are complicated to use. Meanwhile, according to Johnathan Collision, who is responsible for convergence for Czech O2 (good name), the corporate world has a better appreciation of dual-mode devices. All of this would have been news if we hadn’t predicted specifically these market realities in 2004 and in less detail in 2003. The conclusion of my 2004 post was, “For the next few years, sign me up as skeptical.” But now that those few years have passed, we need to revisit this topic. A lot of the old Wi-Fi problems are being mitigated: QoS is emerging, power consumption is improved, throughput and range are improved, costs have dropped, seamless hand-off technologies exist. Also, smartphones are growing in market share, and smartphone users want Wi-Fi for fast and cheap access to data services and VoIP. As the conference in Amsterdam concluded, today isn’t the heyday of hybrid cellular/WLAN devices, but I think we may be close to a tipping point. It’s an uphill battle, but over the next few years, sign me up as optimistic.

More predictions: I don't think the kind of hybrid device that seamlessly roams from cellular to Wi-Fi networks is likely to be the most popular as hybrid devices grow. The reason is that the extra cost and complexity to provide this feature exceeds the willingness to pay for it. Yet smartphone users that have wifi truly enjoy the fast data access they can get at home or at work.

Hotspot and muni-wifi access through these devices has been very limited, because of login hassles and the cost of the services. But that will start to change. Still, for the most part, outside of the home and the office, it will be easier just to use the WAN cellular radio for voice and data.

Initially, these devices will have separate voice accounts for the cellular voice service and the WiFi voice service. Such as Skype, Vonage, or Jabber over WiFi, and GSM phone number for cellular. Over time, service providers (like Sprint) will offer the VoIP service as well, and unite the two access technologies with a single phone number. But it's a few years until this is common.

Enterprise users will remain at the forefront of this segment, and that is where we will see the most action. Expect tight integration with IP PBX systems in the short term. Watch British Telecom as a leader. Cellular carriers will continue to avoid subsidizing these devices, and will try to block functionality.

Mobile carriers that have offered FMC services are reeling from wasted investment, as their competitors are responding with simple marketing tricks like "Zu Hause". Essentially, you can successfully compete against a FMC carrier by offering cheap or unlimited calls from the subscriber's house (the network recognizes the nearest tower, and calls through that tower are free.) Turns out this has little impact on a carrier, since people are at generally at home off of peak hours, thus the network is not at loaded capacity, and thus these calls can be given away without forcing a capital expense to upgrade system capacity.

Filed Under: ,

Add Your Comment

Your email address will not be published. Required fields are marked *

Have a Techdirt Account? Sign in now. Want one? Register here

Comment Options:

Make this the or (get credits or sign in to see balance) what's this?

What's this?

Techdirt community members with Techdirt Credits can spotlight a comment as either the "First Word" or "Last Word" on a particular comment thread. Credits can be purchased at the Techdirt Insider Shop »

Follow Techdirt

Techdirt Daily Newsletter

Techdirt Deals
Techdirt Insider Discord
The latest chatter on the Techdirt Insider Discord channel...