The introduction of Voice over IP (VoIP) systems into the wireless sector could increase competition among operators and put increasing downward pressure on voice prices, a new report predicts, as the Internet protocol (IP) revolution affects the wireless marketplace and boundaries are blurred between wireless and wireline services. The proliferation of VoIP across platforms will help spur greater broadband Internet adoption, states a Merrill Lynch report obtained by Report on Wireless. But not only will broadband adoption increase, VoIP will also have an impact on the wireless world, predicts Everything over IP: VoIP and Beyond, released March 12. "While there is the potential for new services and new revenues, the more general impact is likely to be increased competition between providers and further pressure on voice prices," the report argues. It notes that pressure will be bi-directional since fixed broadband and Voice over Wi-Fi services could erode mobile opportunities, while emerging mobile broadband services could cut into the high-speed data market. The study identifies four ways that VoIP could affect mobile wireless service providers in the future. Lower wireline pricing could reduce wireless substitution in that cheaper wireline services may make it less attractive to disconnect wireline services. Wi-Fi is not only competing with mobile services, but it is becoming complementary, and dual mode devices are coming to the market. "If these devices catch on, we could see: 1) increased revenue pressure on the cellcos; 2) lower mobile network capex; and 3) new relationships between mobile and fixed broadband providers to support services that use dual networks. Under this scenario, it is possible that operators who own both mobile and fixed networks (e.g. telcos, or Canada’s Rogers Communications) could have an advantage over pure-play wireless carriers." Mobile operators’ voice revenue could come under pressure from wireless VoIP, the report notes, referring to substitution within the wireless sector whereby wireless data customers can make calls without being voice subscribers. WiMAX represents potential competition for mobile wireless, but could also be a direct competitor to fixed cable and DSL high-speed services. The Merrill Lynch report also raises regulatory questions surrounding the implementation of VoIP. "Does the concept of ‘universal service’ need to be broadened to include HSD (high-speed data) service (especially since voice services now ride easily on HSD)?" queries the report. The study concludes that a light regulatory approach with respect to VoIP should be taken and will likely result in better economics for the service than legacy policies or complete deregulation. In singling out Canadian regulation and issues the CRTC is considering, the report refers to BCE Inc.’s request for regulatory symmetry between cablecos and telcos and writes:"Our expectation is that VoIP providers will probably be required to be CLECs (or to partner with CLECs) - not an onerous requirement in Canada. We do not believe that telco VoIP services will escape tariff requirements, except out-of-region (and possibly for second lines). We do not expect regulatory symmetry with cable until the telcos have lost substantial market share."