[opendtv] News: The Wi-Fi in Your Handset

http://www.nytimes.com/2006/07/29/technology/29phones.html?th&emc=th

July 29, 2006

The Wi-Fi in Your Handset
By MATT RICHTEL

What if, instead of burning up minutes on your cellphone plan, you 
could make free or cheap calls over the wireless networks that allow 
Internet access in many coffee shops, airports and homes?

New phones coming on the market will allow just that.

Instead of relying on standard cellphone networks, the phones will 
make use of the anarchic global patchwork of so-called Wi-Fi 
hotspots. Other models will be able to switch easily between the two 
modes.

The phones, while a potential money-saver for consumers, could cause 
big problems for cellphone companies. They have invested billions in 
their nationwide networks of cell towers, and they could find that 
customers are bypassing them in favor of Wi-Fi connections. The 
struggling Bell operating companies could also suffer if the new 
phones accelerate the trend toward cheap Internet-based calling, 
reducing the need for a standard phone line in homes with wireless 
networks.

The spottiness of wireless Internet coverage means that for now, the 
phones will be more of a supplement to, rather than a replacement 
for, standard cellphone service. But dozens of American cities and 
towns are either building or considering wide-area wireless networks 
that would allow Wi-Fi phones to connect and make free or cheap calls.

"It's a phone that looks, feels and acts like a cell phone, but it 
actually operates over the Wi-Fi network," said Steve Howe, vice 
president of voice for  EarthLink, which is building networks in 
Philadelphia and Anaheim, Calif.

Later this year it plans to introduce Wi-Fi phone service that Mr. 
Howe said could cost a fifth as much as traditional cell service.

The technology is in its early stages, and it faces some hurdles to 
widespread use. But it is being promoted by big technology companies 
like  Cisco Systems and giving rise to new competition in the mobile 
phone business.

A handful of companies are already using Wi-Fi phones to cut costs 
within offices or on corporate campuses, and the phones will soon be 
reaching the consumer market.

Skype, the Internet calling service owned by  eBay, said last week 
that four manufacturers plan to begin shipping Wi-Fi phones that are 
compatible with the service by the end of September. Among them is 
Netgear, a maker of networking equipment, which plans to charge $300 
for its phone; the other makers include Belkin, Edge-Core and SMC.

Skype allows free calls to other Skype users and usually charges 
pennies a minute for calls to regular phones, although it has made 
all domestic calls free through the end of the year.

EarthLink plans to sell phones for $50 to $100, then charge roughly 
$25 a month for unlimited calling. Initially, the service will work 
only with hotspots where Internet access is provided by EarthLink, 
either in homes or on its citywide networks.

The major cellphone companies have taken notice of Wi-Fi phones, and 
some have chosen to deal with the potential threat by embracing it, 
building it into their business plans.

Cingular Wireless plans to introduce phones next year that will allow 
people to connect at home through their own wireless networks but 
switch to cell towers when out and about.

Later this year, T-Mobile plans to test a service that will allow its 
subscribers to switch seamlessly between connections to cellular 
towers and Wi-Fi hotspots, including those in homes and the more than 
7,000 it controls in  Starbucks outlets, airports and other 
locations, according to analysts with knowledge of the plans. The 
company hopes that moving mobile phone traffic off its network will 
allow it to offer cheaper service and steal customers from cell 
competitors and landline phone companies like AT&T.

"T-Mobile is interested in the replacement or displacement of 
landline minutes," said Mark Bolger, director of marketing for 
T-Mobile. Wi-Fi calling "is one of the technologies that will help us 
deliver on that promise."

Major phone manufacturers including  Nokia, Samsung and  Motorola are 
offering or plan to introduce phones designed for use on both 
traditional cell and Wi-Fi networks. Samsung said last week that it 
had begun to sell its dual-mode phone in Italy.

Wi-Fi not only has the potential to offer better voice quality than 
traditional cellular service, but it also opens the door to 
videoconferencing and other data services on mobile devices. 
Cellphone users are now often limited to the services offered by 
their carriers, but Wi-Fi phones could have access to a wider range 
of offerings on the Internet, in some cases at faster transmission 
speeds than on the carriers' networks.

But there are enough limits to the technology that it may be some 
time before people start tossing out their old cellphones to take 
advantage of Wi-Fi.

The radio signals sent from standard mobile phones connect to tens of 
thousands of cell sites on towers or attached to buildings, 
billboards and other structures. These cells have an average range of 
two miles, allowing them to blanket much of the country.

Wi-Fi hotspots have a much more limited range, usually no more than 
800 feet. Unlike the cellphone towers, which are operated by the 
carriers, the hotspots tend to be controlled by individuals or 
smaller companies, and are not coordinated or organized into a larger 
network.

"It's going to be a long time before you'll have a reliable Wi-Fi 
connection anywhere you go," said Michael Jackson, director of 
operations for Skype.

A company called Fon, which is based in Spain and is backed by Skype 
and  Google, is trying to accelerate the spread of Wi-Fi by selling 
cheap wireless routers to anyone who will agree to let other people 
in the vicinity use them by paying an access fee. The buyers can 
choose to split the fee with the company.

In October, Fon plans to begin charging about $150 for a wireless 
router that also serves as a docking station for a Skype-compatible 
Wi-Fi phone. The phone will connect easily to hotspots operated by 
Fon members.

"Wireless Internet infrastructure can be incredibly inexpensive," 
said Martin Varsavsky, the founder and chief executive of Fon.

Without special software, like that from Fon, however, hotspots may 
not automatically set up a connection with the new phones. Instead, 
until the technology is smoothed out, users might have to configure 
their phones to connect whenever they are in range of a new hotspot.

"If it takes you five minutes to set up at the airport and you save 
50 cents, why would you bother?" said Benoit Schillings, chief 
technology officer of Trolltech, an Oslo company developing software 
to make these connections easier.

Another wrinkle is that Wi-Fi networks operate over unlicensed radio 
spectrum. This spectrum is essentially public space, which means that 
anyone can make use of it, but it also means that the frequencies can 
be congested, potentially causing interference and dropped calls.

By contrast, the major cellphone carriers paid billions of dollars to 
the federal government for the right to use their slices of the radio 
spectrum. They can control who is on their networks, maintain quality 
standards and limit overcrowding. But the spectrum fees introduce a 
layer of costs that Wi-Fi calls are not burdened with.

Companies including Clearwire, founded by the cellphone pioneer Craig 
O. McCaw, are building subscribers-only wireless data networks using 
a technology called WiMax that has a much greater reach than Wi-Fi, 
and mobile phone service is part of their plans.

The hotspot technology has inspired a vigorous and complex discussion 
in the telecommunications world about how the traditional companies 
should react.

On its face, the technology would seem to present the carriers with a 
major problem. The more time subscribers spend connected to Wi-Fi 
hotspots, the less time and money they spend on the cell network.

Yet carriers also recognize that per-minute charges are falling 
across the industry, and that the loss of revenue they suffer if they 
allow people to switch onto a Wi-Fi network could be offset by 
attracting loyal subscribers who sometimes want to connect that way.

Further, some carriers argue that if people connect to Wi-Fi in their 
homes and offices, where there are close and reliable hotspots, they 
will enjoy connections that are better than those via cell towers and 
will not need standard phone lines. In a home, for example, the 
mobile phone could connect as effectively through Wi-Fi as 
traditional cordless phones do now to their base stations.

Larry Lang, general manager of the mobile wireless group at Cisco, 
said Wi-Fi would allow good service in people's homes "without having 
to put up big cellphone towers in the neighborhood." Cisco makes 
equipment that phone companies use to handle digitized calls.

Roger Entner, a telecommunications industry analyst with Ovum 
Research, said some carriers were still wary of Wi-Fi service. He 
said they were concerned that when hotspot reception was not good - 
whether at home or elsewhere - they would be blamed.

"The guys who don't want it are predominately  Verizon Wireless," Mr. 
Entner said. They do not want a customer who is getting poor service 
at a hotspot "complaining that Verizon service is responsible," he 
said.

A spokesman for Verizon Wireless, Jeff Nelson, said the company was 
looking at Wi-Fi service but had no plans to offer a product in this 
area. "At this point, we don't see a great application for 
customers," he said.

Further complicating the business discussion for the carriers are the 
incestuous ownership arrangements in the telecommunications world. 
For instance, Cingular Wireless is owned jointly by  AT&T and 
BellSouth, while Verizon Wireless is part owned by Verizon 
Communications, the regional phone giant.

BellSouth, AT&T and Verizon Communications each have an interest in 
selling high-speed Internet access for homes and offices. If 
consumers have an incentive to set up wireless networks in their 
homes - networks that could be used for superior phone service - it 
could give them another reason to buy high-speed Internet access.

Of course, as many laptop users have discovered, Wi-Fi Internet 
access is not always something you pay for. Sometimes it is something 
you just find, as can be the case when people deliberately or 
unintentionally leave access points open and unsecured. The phones 
that work with Skype, and most likely others, will turn the free 
access point in a neighborhood café - or a neighbor's house - into a 
miniature provider of phone service.

"It can be very open, decentralized," said Mr. Entner of Ovum 
Research. But, he said, such a grass-roots infrastructure presents 
many challenges. For example, callers could get frustrated when the 
hotspot they are relying on for a connection stops working and there 
is no one to complain to.

Mr. Entner said, "You could knock on your neighbor's door and say, 
'By the way, buddy, I've been bumming your Wi-Fi signal to make 
calls; please turn it back on.' "

John Markoff contributed reporting for this article.
 
 
----------------------------------------------------------------------
You can UNSUBSCRIBE from the OpenDTV list in two ways:

- Using the UNSUBSCRIBE command in your user configuration settings at 
FreeLists.org 

- By sending a message to: opendtv-request@xxxxxxxxxxxxx with the word 
unsubscribe in the subject line.

Other related posts: