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Motorola unveils a Wi-Fi phone

Handset maker says calls will move seamlessly between cellular services and wireless Internet networks.

Handset maker Motorola on Monday introduced a new phone that it says will switch calls seamlessly between cellular services and wireless Internet networks, potentially offering business customers big savings if the technology works as promised.

A representative said the CN620 Wi-Fi cell phone is expected to be commercially available by fall or early 2005, making it among the first entries in a new class of mobile communications devices that could roil the cellular industry by reducing the number of minutes billed to customers.

The phone has been in the works since last year, when Motorola struck a deal to use chips from Texas Instruments designed for the purpose.

"This will bring voice and data-rich services to people where they are: at home, in the auto, in the world, or at work," Motorola Chairman Ed Zander said in a statement.

Motorola, Hewlett-Packard and NEC have all announced products that promise to let business customers move calls from cellular carriers to their own networks using short-range wireless technology known as Wi-Fi. Once on the corporate network, callers are connected using voice over Internet Protocol (VoIP), a fast-growing technology that's shaking up the wired telephone industry by bypassing much of the traditional network and its many layers of fees.

Support from carriers for hybrid Wi-Fi cellular phones so far has been less than enthusiastic. Among the many challenges facing such devices is how to ensure customers are billed properly as calls move between different types of networks, analysts say.

Motorola has not yet struck a deal with a carrier to support the CN620. Because the phone uses the GSM cell phone standard--the most popular in the world--carriers AT&T Wireless, Cingular Wireless and T-Mobile USA, which provide GSM service in the United States, are likely candidates to sell the phone.

Despite the challenges, such hybrid devices do provide a tantalizing view of the future. Armed with the appropriate software, such gadgets could eventually use a home's Wi-Fi access point to make VoIP phone calls using the Internet rather than a traditional home phone line.

Wi-Fi phone proponents say the combination makes sense. Wi-Fi is fast, has a 300-foot range and can be used for downloading large amounts of information. Meanwhile, cellular networks stretch for hundreds of miles but can usually only manage download speeds of about 50 kilobits per second to 500kbps.

CNET's Evan Hansen contributed to this report.