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.)Since December, I've been trying to use a UTStarcomm F1000 WiFi phone with service from Vonage. Although the phone performs better than I expected (being bearish on VoWiFi), it still performed far too poorly for the general public to adopt it. The WiFi phone, for starters, is difficult to configure to my home network with WEP enabled. After that, it worked quite poorly, with calls that didn't ring, calls without sound, and calls with one way sound. Turns out that this is all solvable by going into your Home Gateway/WiFi router and entering a bunch of port forwarding settings. So be sure you're comfortable setting UDP and TCP pass-through configurations on your router (i.e. not mass-market). The battery life was the pleasant surprise. Early WiFi phones sucked up the battery in hours, but this little phone can go days without a charge in standby. I didn't talk on it heavily, since the reliability wasn't so good, but the battery seemed to hold up to active use, too. But before we celebrate a great battery life, don't rush out and buy a F1000 yet. Mine suffered frequent disconnects from my WiFi router. I would occasionally go to use the phone, and notice that it was searching for a base, and not connected. That means my inbound calls had been going to voicemail, too. No reason here, it just disconnects occasionally. Could have be my configuration, but the phone also disconnected frequently when I took it to other open WiFi APs. Speaking of other open WiFi APs, forget about it. Unless you're an admin of the other APs, you'll get lousy connections. Here's why: first, it doesn't work Starbucks, T-Mobile, Wayport, Concourse, or any Hotspot provider. That's because these WISPs require logins, and usernames and IDs and payment data. The phone has no UI for completing these processes. I envisioned a hack where I clone the phones MAC address in my laptop, get provisioned, then turn off the laptop and activate the phone, but that's not for everybody (but it would be a cool script to write). So, for anyone but the most serious geek, there is no hotspot connectivity. Include in that the majority of Metro WiFi projects, most of which are still vapor, and others of which require login. Open WiFi - WiFi APs with NO security activated and no login required (just like we always tell everyone NOT to enable on their AP). Well, at least you can log onto them with the WiFi phone, right? Yes, you can. But expect a lot of dropped calls. Remember the paragraph above regarding setting up port forwarding and opening ports for VoIP? Well, it's almost certain that your uncle/mom/friend's open access point doesn't have the correct port forwarding established. Even if they use VoIP from the same provider, they would be forwarding the port traffic to their VoIP phone, not yours. I've tried this in Belgium on my friend's neighbor's unsecured WiFi AP. While my laptop could surf happily, my VoIP phone dropped calls, blocked sound in or out or both, and frequently disconnected. QoS: We all know there is no QoS in current VoWiFi. I didn't take any scientific measurements, but I don't think this caused me any trouble on the WiFi segment of the link. The WiFi APs I've used are well under capacity. QoS is more of an issue as the traffic passes over the Internet segment of the connection, so wired VoIP and VoWiFi will most often have the same level of QoS problems. This, and all the above, will change over time, but for now and for the medium term, this stuff is still the use of geeks like you and me. Don't sell your cellular stocks just yet.