Connect the Dots
I've spent the past year analyzing the potential for Voice over WiFi. Here are some of the most interesting data points:
1) 70% of cellular usage is indoors, according to Jupiter Research.
2) Broadband penetration is >30% in US households and much higher in high ARPU cellular households.
3) Low cost WiFi chipsets, adaptors and access points are everywhere.
What are the implications for mobile carriers?
On the positive side, Voice over WiFi can improve coverage where people live and work without more spectrum, capital, or zoning approvals. However, if up to 70% of cellular traffic can switch to unlicensed spectrum with WiFi, than what is the value of the licensed spectrum? T-Mobile US may suddenly find itself on a level playing field with Verizon. Looking at the question another way: what would the carriers do if the FCC handed them 70% more licensed spectrum? Would they lower voice pricing to keep the network fully utilized or rollout more 3G with its low margin and unclear payback? Either option is ugly for them.
Worse yet, Voice over WiFi enables any Tom, Dick or Vonage to siphon off up to 70% of cellular traffic since it is as easy for Vonage to provide Voice over WiFi as Verizon. The only missing piece is a good, inexpensive WiFi handset.
When will we see mass market handsets with embedded WiFi?
Carriers certainly have reasons to hold them off but competition will ultimately force their hands(ets). All it takes is one carrier to launch a good solution and the rest will follow. My guess is that there are more than 20 WiFi-enabled handsets currently in development from nearly every vendor. Some of these will even support UMA, a form of Voice over WiFi. Expect several to launch in 2005.
1) 70% of cellular usage is indoors, according to Jupiter Research.
2) Broadband penetration is >30% in US households and much higher in high ARPU cellular households.
3) Low cost WiFi chipsets, adaptors and access points are everywhere.
What are the implications for mobile carriers?
On the positive side, Voice over WiFi can improve coverage where people live and work without more spectrum, capital, or zoning approvals. However, if up to 70% of cellular traffic can switch to unlicensed spectrum with WiFi, than what is the value of the licensed spectrum? T-Mobile US may suddenly find itself on a level playing field with Verizon. Looking at the question another way: what would the carriers do if the FCC handed them 70% more licensed spectrum? Would they lower voice pricing to keep the network fully utilized or rollout more 3G with its low margin and unclear payback? Either option is ugly for them.
Worse yet, Voice over WiFi enables any Tom, Dick or Vonage to siphon off up to 70% of cellular traffic since it is as easy for Vonage to provide Voice over WiFi as Verizon. The only missing piece is a good, inexpensive WiFi handset.
When will we see mass market handsets with embedded WiFi?
Carriers certainly have reasons to hold them off but competition will ultimately force their hands(ets). All it takes is one carrier to launch a good solution and the rest will follow. My guess is that there are more than 20 WiFi-enabled handsets currently in development from nearly every vendor. Some of these will even support UMA, a form of Voice over WiFi. Expect several to launch in 2005.
posted by dury at 9:02 PM
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