If all goes as planned by a small group of vendors, within a year or so consumers and mobile professionals will be toting around wireless handsets that will have the capability of hopping on and off Wi-Fi networks, making handoffs between unlicensed frequencies and more traditional mobile networks, and generally making life a lot easier for those who spend a good portion of their talking time in corporate environments and Starbucks.

Of course, few technology transitions go as planned, and even those that do often hit speed bumps along the way. Wi-Fi, however, is not exactly the type of technology that has developed along traditional lines, weaving a quixotic path from hobbyist toy to the hot technology for a few months and finally settling in as a checklist item on virtually every laptop sold and as a de facto standard for in-home and campus wireless communications.

At the same time, carriers have gone through their own on-again, off-again relationship, both disparaging Wi-Fi as unreliable and simply unprofitable while simultaneously being unable to stay away from it. Blending mobile technology with Wi-Fi is destined to be one of the hottest technological debates of 2005, in part because there appears to be significant carrier interest.

Integration efforts got a kick-start this past summer when a group of vendors and carriers — including T-Mobile, AT&T Wireless, BT and Cingular Wireless — announced that they had come to agreement on specifications for roaming services between cellular and Wi-Fi networks. That group, the Unlicensed Mobile Alliance, already has submitted its proposed specification to the 3GPP group with the T1 Committee and expects to have some products based on the standard on the street by mid-2005. Carriers have been reluctant to talk openly about their plans but are actively participating in the shaping of the specification, said Steve Shaw, director of marketing for Kineto Wireless, a founding member of the UMA and one of the only companies that is solely dedicated to the mobile/Wi-Fi integration market.

“For the UMA process to get where it is shows that the carriers really do care about this,” he said. “A lot of companies don't want to tip their hands at this point, though.”

Several carriers contacted for this story refused comment, saying the subject was too strategic at this stage. According to at least one analyst who has been following the mobile/Wi-Fi integration market closely, the reaction from carriers to the new blending of technologies has been mixed and deeply divided.

“We get very mixed feedback on the degree of interest and the intent of rolling this out,” said Rajeev Chand, senior equity analyst for wireless at Rutberg and Co. “Some carriers are bullish on it and are moving forward pretty aggressively. Some are bullish on it but hesitant because of technology and business issues. And then there are some that are just simply bearish on this.”

Like the entire Wi-Fi segment, one of the biggest concerns appears to be about the business model of offering an integrated service. On the face of it, giving users a way to connect with Wi-Fi networks using their mobile handsets would appear to simply take away minutes of usage from carriers and put a damper on average revenue per user. However, according to Shaw, there are several compelling reasons to offer an integrated service. Shaw, in fact, wraps up the reason in what he calls the three C's: coverage, cost and capacity.

Perhaps most important is consumer demand and customer retention.

“Coverage is the primary reason people churn,” Shaw said. “People spend most of their time talking on their phone at their home or at the office.”

Chand added that some mobile-only carriers could use an integrated service as a primary line service. “The thought process is if they can do wireline replacement, they end up getting a bigger piece of the telecom pie,” he said.

From a capacity standpoint, carriers are looking to do anything they can to increase it without being forced to erect new towers.

“Roughly 30% to 35% of the world's voice minutes are being carried over mobile networks, and it's growing,” Shaw said. “There's a physical limit in towers. They need a cost-effective way to add capacity. They see this as a low-cost way to dramatically add coverage.”

In some densely populated and heavily Wi-Fi-enabled markets such as San Francisco, the capacity gains (again, assuming that the correct business agreements between carriers and Wi-Fi network operators are struck) could go up exponentially.

Just as important is the ability to add that coverage cost-effectively. According to Shaw's numbers, connecting to a Wi-Fi network allows carriers to cut backhaul costs by almost 90% because voice is converted quickly to packets and can be transported over an IP network.

“It's an order-of-magnitude cost reduction,” Shaw said. “It's literally one-tenth the cost.”

However, that also brings up another potential concern for carriers: network architecture. When voice travels over Wi-Fi networks, it essentially looks the same as voice over IP (VoIP). And according to Chand, there's a new debate brewing over whether the best solution might be to skip the UMA solution and go directly to a session initiated protocol (SIP)-based model.

“From our view, UMA has the most near-term traction, but we think the SIP architecture is much more scalable,” Chand said.

Several vendors in the VoIP arena also are talking about integrated networks that would treat Wi-Fi access points as additional entry points to the greater VoIP environment. In that scenario, carriers could take a huge step forward to the vision of any service on any device.

“Frankly, it doesn't matter where the call originates,” said Tracy Venters, vice president of solutions engineering for tekVizion, a Richardson, Texas systems integrator.

But perhaps the biggest issue and driver for mobile/Wi-Fi integration will be the release of several handsets next year that can communicate seamlessly over either type of network. Once those get into the hands of early adopters, carriers will be forced to adapt.

Nokia was one of the first out of the gate with its Communicator 9500, while Motorola and NEC also have publicly stated their intention to add Wi-Fi capability into their high-end handsets. However, Chand believe the market for integrated services won't really take off until it becomes almost a checklist item for every handset on the market.

“Adding Wi-Fi only adds $15 per unit, so it's not a huge cost factor,” he said. “The big question is ‘when are they going to have low-end phones?’ It's just a matter of getting the handset guys moving forward.”

CUTTING EDGE

Ken Kolderup

VP of marketing, Kineto Wireless

Ken Kolderup has been here before: on the cutting edge of technology, acting as marketing chief for a vendor that seems to have a can't-lose proposition. But he insists that this time it's different.

In the midst of the telecom boom in 1999 and 2000, Kolderup was the head of marketing and chief advocate for Jetstream Communications, a company that seemed destined to be one of the major players in the then-emerging voice-over-DSL market. Then the bottom fell out, the vast majority of the CLECs went belly up and Jetstream went kaput.

In his current role as vice president of marketing for Kineto Wireless, Kolderup is again one of the main cheerleaders for an emerging technology — mobile/Wi-Fi integration — but one that is in a much better position than voice over DSL. For one, mobile/Wi-Fi integration has the backing of carriers with actual money in the bank. Second, despite the apparent surface difference, there actually are similarities between the two technologies.

“I was actually sitting around thinking that there has got to be a way the mobile operators and the broadband operators can leverage each other's technology,” he said of his time after Jetstream. “Then a recruiter called me about this job, and all of sudden the chocolate and peanut butter light went off in my head.”

Perhaps just as important is that mobile Wi-Fi — in particular the specifications developed by the Unlicensed Mobile Alliance — is being developed as a flexible architecture that can encompass multiple deployment schemes.

“UMA is not just a voice perspective and a circuit-switched perspective,” he said. “It's about a seamless experience across the service menu. A lot of carriers are looking to UMA as a way to drive SIP deployment.”

And unlike voice over DSL, which had somewhat limited geographic appeal, mobile/Wi-Fi integration is finding fans in virtually every developed telecom market, Kolderup said.

“It's a horse race. There are operators in North America, Europe and Asia that say if the technology were ready, they'd be deploying today.”
— Vince Vittore