Cell phone makers to adopt Internet calling

With cost-saving voice over Internet telephony taking off and replacing wired phones, makers of cellular phones are taking notice. Cell phone heavyweights Qualcomm, Texas Instruments, Nortel Networks and others are incorporating VoIP into the cell phones, chips and wireless network equipment they manufacture or design, executives said here at CTIA Wireless 2005, a major North American wireless trade show.

VoIP is the basis for Internet phone services, popularized by commercial VoIP provider Vonage and free peer-to-peer phone service provider Skype. VoIP calls are digitized and routed over networks using the Internet Protocol (IP), which is the backbone of the Internet. So far, VoIP calls are unregulated, a major factor that can keep VoIP calling plans at half the cost of traditional phone services.

Major cell operators--many of which already make extensive internal use of VoIP to cut down on the cost of their own operations--are now making plans to extend VoIP calls from the network core to the handsets. This push coincides with wireless broadband networks the operators are now building, which can transmit the data bits fast enough, and with more accuracy, to make VoIP calling on cell phones a reality.

"VoIP is one of the key drivers right now," said Texas Instruments Advanced Wireless Architectures Manager Bill Krenik.

Qualcomm, Nortel shift over VoIP
There's no better sign of the big influence that VoIP is having on cell phones than a decision by wireless powerhouse Qualcomm to tentatively halt plans for a new generation of its latest cell phone technology, known as EV-DV. Designed to deliver voice calls and high-speed data, EV-DV was considered the next step for operators like Verizon Wireless and Sprint, which currently use another Qualcomm technology called EV-DO, which delivers just broadband to handsets.

But with VoIP, the latest generation of EV-DO, known as EV-DO Revision A, can also support voice calls, making EV-DV irrelevant. In a press conference here, Qualcomm Chief Executive and founder Irwin Jacobs said the chipmaker and CDMA inventor has, for now, shelved its EV-DV plans.

"We have developed EV-DV chips for infrastructure and for developing phones, but we've backed off--voice over Internet Protocol is the future," Jacobs said.

Major cell phone equipment maker Nortel Networks on Tuesday said VoIP played a role in a new business strategy to begin building equipment using EV-DO Rev. A, which delivers data rate bursts of between 1.8 and 3.1 megabits per second. "It will allow operators to serve more customers on the same spectrum while delivering VoIP and other advanced multimedia services," said Richard Lowe, president of a unit of Nortel.

Verizon Wireless, which plans to trial Nortel's EV-DO Rev. A gear in 2006, indicates it'll also be jumping on board the VoIP-via-cellular bandwagon. "EV-DO Rev. A fits in with our mantra of providing our business and individual customers with superior voice and data networks in the U.S.," said Ed Salas, Verizon Wireless' vice president of network planning.

The Wi-Fi factor
Another force pushing VoIP onto cell phones is Wi-Fi, the short-range wireless broadband networks that use free airwaves and are found in millions of homes, offices, retail outlets, transportation hubs and public areas. At first, handset makers added Wi-Fi radios to cell phones so the phones could download large blocks of data, like a Power Point presentation.

But as VoIP home subscribers in the United States grow at a rate of 32 percent per year, Wi-Fi cell phones are no longer viewed by manufacturers as just high-priced tools for business executives. They now see Wi-Fi phones, in tandem with VoIP software, as a way to more reliably deliver phone calls directly into homes or offices, thus taking business from the major local phone companies, known collectively as the Bells.

But Wi-Fi handsets are a conundrum. The phones will, in essence, allow people to make free phone calls over the Wi-Fi networks, rather than over the cell operators' own airwaves. But Texas Instruments and other major manufacturers say Wi-Fi phones are actually a benefit for operators because they free up more of the expensive airwaves that cell phone calls typically travel over.

"That's great for cell phone operators because it preserves some of their spectrum for other uses," said TI's Krenik.

A Wi-Fi phone is still a pricy bauble, and they're few and far between. But chipmakers are unleashing new cell phone reference designs and chips here at CTIA Wireless 2005 that will, executives say, dramatically reduce the price of future Wi-Fi phones. With low costs--below $150--the market for such handsets will increase from about 1 million in circulation this year to 154 million by 2008, say various analysts.

Texas Instruments is also trying to drive down Wi-Fi phone costs with a new single chip, known as WiLink 4.0, that was introduced here at the CTIA show, Krenik said.

Philips Semiconductors, handset makers Motorola and Ericsson, and 11 other wireless firms have joined forces to make Wi-Fi phones more affordable, mostly by developing a standard known as Unlicensed Mobile Access. Among its features, the UMA specification lets phones automatically switch between cell and Wi-Fi networks, considered key to the phone's adoption by consumers.

"Every major operator is interested in this," said Philips Semiconductors Vice President Ton van Kampen.