Motorola phones to call on Wi-Fi, VoIP

Internet phone companies and cell phone giants grapple with Internet phone technology at 3GSM show in Cannes, France.

Motorola said Monday that it is developing cell phones capable of making calls using Wi-Fi networks, a big step for Internet phone forces now eyeing the wireless industry.

The world's No. 3 handset maker plans to add Internet phone software from Internet telephony provider Skype to a select number of Motorola phones that link to the Internet using short-range, high-speed Wi-Fi networks.

With the phones, it'll be possible for Skype customers to call each other--at no additional cost, in most instances.

Because the phones would steer calls away from cell phone networks, combination cell and voice over Internet Protocol phones could have a profound impact on the wireless industry.

VoIP calls, connecting via a Wi-Fi network to a home broadband connection, can be made for free or at prices sometimes half of that for a cell phone call. But when on cell phones, they raise a serious question: Why would a cell phone service provider want to sell or host such a service that has the potential to eat into its own revenue?

As one wireless whiz put it Monday, "cannibalism happens" in the telephone industry. Also, wireless operators see VoIP as an opportunity to take business away from the local wireline phone competition.

"Skype is natural fit," said Liz Altman, vice president of business development for Motorola mobile devices.

Hue and cry over Wi-Fi
Interest in combination cell and VoIP phones is growing from handset makers and operators, according to executives attending the 3GSM World Congress show in Cannes, France. The huge wireless trade show, at which the Skype-Motorola deal was announced, began Monday.

"We're getting a lot of requests to supply handset makers with the relevant software. Nokia is very, very big on this," said David Rivas, chief technology officer of Sun Microsystems' mobility unit. A version of Sun's download software is now on more than half the world's cell phones. A Nokia representative had no immediate comment.

But there are several obstacles to cramming VoIP onto cell phones that handset and network equipment makers have yet to overcome.

Most have to do with Wi-Fi phones. For example, most U.S. operators haven't found a way to adequately switch between the two wireless networks, keep track of the calls for billing purposes or keep a phone from draining its battery too quickly. There are thousands of Wi-Fi networks nationwide--but only a fraction of what's needed for coast-to-coast coverage.

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