Manufacturers poised to shake up wireless market with dual-mode handsets

Canada's major wireless operators are keeping mum on how they plan to combat the widespread usage of dual-mode wireless devices that operate on an indoor wireless network while in the home or business and the conventional cellular network while on the go. The emergence of these types of handsets will almost certainly mean a significant loss of revenue for the country's wireless operators as users would be able to switch to the "free" indoor wireless LAN when in range, thus reducing usage of cellular airtime. Given the significant volumes of mobile calls that take place within the home or at the place of business, it shouldn't come as a surprise that the Big Three are keeping any plans on monetizing mobile VoIP by dual-mode devices to themselves. Yet there is plenty of evidence to suggest that these home phone/cell phones are ready to shake up the wireless telephony market in 2008. A number of the handset makers and equipment vendors have announced trials of the technology. Most recently, Nortel Networks Corp. and Qualcomm Inc. announced that they had successfully tested an "out-of-the-box" dual-mode service. The tests were between Nortel's Internet multimedia subsystem (IMS)-based voice call continuity (VCC) network solution and a Qualcomm chipset. Richard Bodin, fixed mobile convergence (FMC) product marketing manager at Nortel, says that carrier uptake is not only a matter of tweaking the business model, but also one of ease of use and capability. "They want this to be plug-and-play," he says, "with a minimum of configuration. We did a pre-VCC solution for dual mode in France, and the up-take was slow. The reason was that the handsets were not suited to the consumer market." Bodin argues that this is due to the fact that the phones didn't have popular features such as cameras, but another issue is that carriers won't subsidize dual mode devices. This is perhaps one of the main reasons that these types of handsets will be adopted by the business community first. And this is exactly what's happening. The newer dual mode technologies, such as the latest addition to Nokia Corp.'s E-series of mobile phones for business, have setup wizards for features such as email, as well as push-button access. And Nokia is pushing the dual-mode handset on IT managers, trying to convince them they will save money in the long run by leveraging VoIP capabilities. But the unsubsidized cost of Nokia's E51 is $485 and coming up with a return on investment might be difficult at this price. Still, given that more and more mobile calls are originating from work - some research puts these numbers at more than 60% of calls - having the ability to drop the call to a "free" VoIP signal on the corporate LAN could end up saving a company some serious coin.It's an interesting strategy, and one that functions as a kind of end-run around the carriers. The handset subsidies have been a good deal for the manufacturers, and seen as a necessary investment in order to keep customers happy with the latest gadgets and, of course, to increase network usage. With dual mode - for now, at least - that model is turned on its head. The hype on the consumer side appears to be just that. T-Mobile has had limited traction in the US with its rollout of Nokia's 6136. The push now is to let businesses see the value of dual-mode handsets. Dave Hattey, president and CEO of Ottawa-based FirstHand Technologies, which provides enterprise mobility products for cellular smartphones and dual-mode devices, believes that dual mode handsets are market-ready. He says minor issues like battery life (Wi-Fi protocols are hungry) will be solved - it's the carriers that are holding up adoption. "Slow dual mode uptake by carriers in Canada is why we've added single mode to our portfolio," says Hattey. "We are pushing that directly through the likes of Nortel, NEC, and 3Com Corporation. Our technology is carrier agnostic - the same server can take users from a number of cellular networks. It essentially becomes a PBX."As more products begin to ship in 2008 - Infonetics Research forecasts a five-year annual growth rate for Wi-Fi and dual mode of 198% between 2006 and 2010 - one of the issues in Canada will be the allowance for full duplex voice and data. As it stands now, surfing the web can compromise a VoIP call, but here again Rogers may have the edge as it rolls out UMTS. On the residential front, savvy consumers can take matters into their own hands and use dual mode to switch to their own wireless routers. Despite the fact that much of the hype to date has been from big vendors like Avaya Inc. and Cisco Systems Inc. on the enterprise front, Windows-based devices now have imbedded session initiation protocol (SIP) stacks, meaning that dual mode could have widespread consumer up-take. The only carrier play would be to bundle with residential cable or DSL, so that when a call switches to Wi-Fi it is backhauled over the same network. This may be Rogers' only option to the consumer market: sell dual mode as a cheaper cellular plan to those consumers that are bundled with its own residential high speed cable. Bodin from Nortel says that if the call is anchored in the network it can be tracked, and therefore kept secure. "What we find is that different operators have different strategies. Some are going with VPN, and some with encryption," he says. Vendors and carriers alike believe that dual mode QoS and security issues are fixable - as has been proven by Neuf Cegetel and Orange (France Telecom) in Europe, and T-Mobile in the US.In the end, the real news is in what people aren't saying, which is that the business model for dual-mode handsets has yet to be determined by either the carriers or the handset makers. As a result, this technology is truly disruptive, and will change how the big players go to market in 2008.

Manufacturers poised to shake up wireless market with dual-mode handsets

News | December 18, 2007

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