Wireless VoIP: what threat to mobile operators?

Communications & Strategies, Oct, 2005 by Frederic Pujol

Several technologies and networks have the capacity to enable mobile VoIP: 2.5G and 3G cellular as well as Wi-Fi and WiMAX networks. Voice can be managed either by the network itself, or by software solutions installed on the handset. Release 5 of UMTS will enable end-to-end IP management.

The market is getting off the ground with VoWi-Fi solutions: particularly through integrated cellular/Wi-Fi offers. Wide-scale deployment of these solutions is expected for 2006, but not until 2008 on cellular network.

The success of wireless VoIP will depend mainly on the rates charged for voice calls on 3G networks, on the availability of unlimited data packages, on the regulatory situation, and on the availability and price of the handsets themselves (Wi-Fi and dual mode cellular/Wi-Fi).

Two business models for wVoIP could emerge: the first, developing initially in the United States and whose driving force will be independent Wi-Fi access networks, and later mobile operators, will resemble the internet model.

The second model, which is likely to be the most common one in Europe and Japan in the coming years, involves wVoIP being "controlled" by mobile operators, and incorporated into their rate plans.

Driving technologies

By the end of 2004, VoIP over the fixed network had begun to be adopted in Asia, North America and Europe thanks to the growing use of broadband access and SIP. The outstanding question now is the possibility of carrying VoIP over to mobile networks. The stakes this represents for mobile operators are particularly high, given that 80% of their earnings are currently telephone based. To give body to VoIP's emergence on the mobile calling market, several technical options are possible.

On cellular networks, aside from increasing bit rates on the radio channel, it should be noted that, more and more, network standards include IP mode. Added to this, the handsets' increased memory enable the use of VoIP client software, plus a growing number of compatible operating systems are becoming available on mobile phones. UMTS TDD and CDMA 2000 EV-DO will make it possible for operators to deploy VoIP relatively quickly, but most of the players feel that, in the medium term, it will be evolved 3G architectures (UMTS release 5, with an IMS architecture--based on SIP--and CDMA 2000 EV-DO Rev. A) which will enable optimal convergence between a fixed and mobile network.

WLAN and BWA technologies have provided good conditions for Voice over IP processing since the 802.11e standard's release, and have proven more credible solutions than Bluetooth. As to WiMAX, the 802.16 norm enables voice transport, while version 802.16e will enable mobility management.

Software solutions like Skype, Wengo and MSN Messenger can be used on high quality 2.5G networks, using a compatible operating system running on the handset

Launch of commercial offers

Currently, most commercial deployments involve Wi-Fi solutions for integrated Wi-Fi-WiMAX/cellular services, thanks notably to the UMA protocol. The most advanced in this field are clearly Asian carriers Korea Telecom and Japan's DoCoMo. KT markets a service that lets users equipped with dual mode mobiles (WiBro/cellular) or PDAs switch over to Wi-Fi at hotspots. And the service is expected to become more widely available in the coming months thanks to WiMAX. For its part, DoCoMo offers a 3G/WiFi service which is geared chiefly to business users. Meanwhile, in the US, veteran operators are planning to launch this type of service by the end of 2006, in part to improve coverage (notably by investing in WiMAX networks) and in part to further their quad play bundling strategies. But it is especially the newcomers, like Vonage and Skype, who are shaking things up. Skype has signed an agreement with Motorola for its Skypein services to be available on the manufacturers' handsets, for use on either Wi-Fi or 3G networks. When equipped with a compatible OS, users can also use Skype software directly, although cellular operators are working to limit this scenario as much as possible. Vonage too offers VoWi-Fi services, thanks in part to its collaboration with manufacturer UTStarcom. Several of Europe's mobile operators are marketing GPRS/UMTS/WiFi services as well and most carriers who operate a UMTS licence have tested the TDD solution, but none have plans for wide-scale deployment before 2006/2007.

Benefits and obstacles for users

Studies have shown that in, Western Europe and in the US, over a third of all calls made on a mobile phone are placed either from the home or the workplace. This means that, potentially, over 40% of outgoing calls can be processed using a Wi-Fi device connected to a WLAN (home network or hotspot). These solutions allow users to enjoy lower calling rates, better coverage and greater quality of service (particularly in the United States). In countries where the recipient pays a portion of the cost of the call, this cost is eliminated, and the price of long distance calls is much lower than the price charged by a cellular network (close to 70% in the US). VoIP over Wi-Fi or software solutions reduce certain costs dramatically, including international and out roaming calls. It is chiefly business users who are involved here, and who are likely to benefit initially. The growing use of IP on cellular, WiFi and WiMAX networks enables not only voice calls over IP but several new services as well. Most notable among these new services are IM and presence (possibly combined with global positioning), videophony and video phone conferencing. And, in the business world, VoIP can be integrated into collaborative work software suites.