Wifi Phones: The Death of Telcos and Rise of ISPs?

Pissed off by crappy cell phone connectivity or your monthly cell phone bills?

Help is on the horizon – in the form of Wifi phones. This vision is already real, if you live in Seattle and are a T-Mobile subscriber.

With these phones, you can call for free or much lower cost over Wifi access hotspots. There are limited phones available currently for such usage, with only the Nokia 6136 and the Samsung SGH-T709, available at affordable prices of $30 after rebates. Of course, demand will definitely ensure more models next year.

I wonder how the business model will look like with such cheap phones because telcos might not be able to earn on call access plans anymore, if VOIP is going to be charged for free over Wifi. Skype tie-ins will make calling free too. They are currently only providing this service on top of regular cellular network-based plans of $40 per month. One other possible revenue model is that these telcos will do is to charge for data access over the Wifi spots as T Mobile is not enabling data access on these Wifi phones, although I am sure their competitors, like Cingular, will. It will be interesting to see how these telcos cannibalize their own existing cellular-based products to embrace Wifi and how Wifi providers such as th Internet Service providers (ISPs)disrupt the telco market in collaboration with hardware providers like Nokia, Motorola. ISPs could just provide these services as an extension for broadband connection plans.

You can read more from this NYT article, although I found these three facts worth mentioning.

  1. Lower Operating Cost — “Carrying calls over Wi-Fi networks costs the company as little as 20 percent of the expense of calls handled on a cellular network.”
  2. Better Penetration in Enclosed Spaces — “Providing calls over Wi-Fi also has the potential to improve voice quality in often hard-to-serve interior spaces in detached homes and apartment buildings.”
  3. Poor interoperability — “These Wi-Fi-only phones lack cellular radios, and often have difficulty in connecting to Wi-Fi networks that are not completely free and open, or are not operated by the phone’s owner.”
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2 thoughts on “Wifi Phones: The Death of Telcos and Rise of ISPs?

  1. I already looked into the possibility of installing Skype (or an emulation of it) on my Nokia 9300i Communicator, but there’s nothing available, and admittedly the program would most probably be too big to run on it. It is the future though! I remember my friend Hanno in Madison making Skype calls from his Psion palm thingy…. it looked cool!

  2. ya, sometimes i wish i was an engineer so i could do it myself. wishful of me i know. but i am all for the future! skype-enabled phones are around the corner. 2007 will be a good year, i hope!

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