Switching from cell to Wi-Fi, seamlessly

T-Mobile USA, the fourth-largest mobile phone company in the United States, is preparing to launch a service this month that will allow people talking on their cell phones to seamlessly switch between T-mobile's cellular network and their home Wi-Fi networks.

T-Mobile's new service, which will be the first of its kind in the United States, will be a test case for other operators also looking to deploy similar services. Sprint Nextel, through its joint venture with four major cable companies, is also looking into developing a similar service. And Cingular is testing a service in its labs.

Carriers in Europe, such as Telecom Italia and Orange, have already said they will launch their services later this year, charging between 10 and 15 euros per month for unlimited calling from dual-mode Wi-Fi/cellular phones used in home networks. The business case for consumers in Europe is simple: The dual-mode services are much cheaper than current cell phone and landline rates.

In the United States, where voice minutes are sold in buckets, Wi-Fi/cellular services could be a harder sell. That said, there are some compelling benefits for U.S. consumers. For example, cell phone users will be able to conserve voice minutes while talking on the Wi-Fi network, which could allow them to reduce their usage plans and reduce phone bills. They'll also get access to a higher speed network that allows them to download mobile content, like Web pages, music and games, much faster than they can even from a 3G wireless network.

But analysts, such as Charles Golvin with Forrester Research, say that these services may not catch on with consumers until users see added functionality that they can't get on their regular cellular phones.

"Just like with the voice over IP movement, people will be interested in converged Wi-Fi/cellular services at first based on price," he said. "But eventually it will become more about features."

Tapping the advantages of IP
Specifically, Wi-Fi-based phone services will allow consumers access to a whole slew of IP-enabled features, such as receiving voice mail from a Web portal, or being able to see whether friends on their buddy lists are available for phone calls.

T-Mobile, which is using a standard technology developed for GSM networks called unlicensed mobile access, or UMA, is keeping details of its new service under wraps.

"T-Mobile is interested in the replacement or displacement of landline minutes," a spokeswoman said in an e-mail. "We believe the future will be about leveraging diverse forms of radio access technology for our customers and Unlicensed Mobile Access, we think, is one of the technologies that will help us continue to deliver on that promise.

But Kineto Wireless, one of the companies developing software to enable the service, said a commercial service is expected to launch this month in at least one major city. T-mobile has been testing the service for about a month in the Pacific Northwest, according to several blogs.

Using equipment supplied by T-Mobile, the initial Wi-Fi/cellular service will be limited to home-based Wi-Fi networks that use standard 802.11 Wi-Fi routers from companies such as D-Link or Linksys. The routers will be used to provide the Wi-Fi signal indoors. And users will be able to call anyone over the Wi-Fi home network for a flat fee. When they're outside the Wi-Fi hotspot, the dual-mode phone, which at launch will likely be the Samsung SGH-T709, will automatically switch over to T-Mobile's cellular network.

Eventually, the T-Mobile dual-mode service could be expanded to T-Mobile's 7,836 hot spots located in airports, cafes and other public areas throughout the country. Once this happens, customers could have even more flexibility in when they get access to the mobile Wi-Fi network.

"I think T-Mobile will migrate to ubiquitous access over time," said Richard Gilbert, CEO of Kineto Wireless. "The service won't work everywhere instantaneously, but this home version is a step in the right direction."

Wi-Fi zealots envision a day when dual-mode cell phones will allow people to talk over a wireless IP network on just about any Wi-Fi network. And with cities such as Philadelphia and San Francisco deploying citywide Wi-Fi networks, there could be some cities in the next few years where Wi-Fi access will be almost ubiquitous.

"The world is going mobile," said Dominic Orr, president and CEO of Aruba Networks, a company that makes Wi-Fi equipment for corporate users. "There are already massive coordinated and uncoordinated efforts to light up Wi-Fi everywhere. And coverage is everything. I am betting that one day Wi-Fi will be almost everywhere."

Limitations to Wi-Fi access
But analysts caution that the dual-mode phone services offered from cell phone operators won't let people access just any Wi-Fi network.

"Anyone who thinks they'll be able to use their dual mode phone from Cingular or T-Mobile at any Wi-Fi hot spot has another thing coming," Forrester's Golvin said. "You have to remember that the operator still programs the software in the phone. So they aren't going to allow people to access Anaheim's or Philadelphia's Wi-Fi network unless they have a special arrangement."

But for a carrier like T-Mobile using Wi-Fi, even on its own Wi-Fi networks, dual-mode service could help it compete against the other big three cell phone operators in the United States. For one thing, dual-mode service will allow the carrier, whose wireless spectrum is relatively constrained, to expand its footprint to include its more than 7,000 hot spots and to increase its in-home coverage.

"It makes sense for T-Mobile to offer this kind of service because their cell phone coverage is so weak," said Golvin.

T-Mobile also doesn't have a lot of spectrum to deliver high-speed 3G data services on phones. That's why the company has put up roughly $4.2 billion so far on bids for new spectrum currently being auctioned off by the Federal Communications Commission. T-Mobile is currently leading the auction, which began about three weeks ago.

For other mobile carriers, the business case for offering Wi-Fi/cellular service is less clear. The three top cell phone carriers--Verizon Wireless, Cingular and Sprint Nextel--each have plenty of spectrum to offer 3G services. They also have strong network coverage throughout the United States. But they could use the Wi-Fi networks to offload some capacity on their 3G networks as more users start downloading bandwidth-intensive applications, such as video.

But most analysts agree that dual-mode services will likely be more appealing to broadband providers than to wireless carriers themselves. Broadband providers could use the dual-mode service to offer their high-speed Internet and voice customers another service that will lock them into a single provider.

For example, Sprint is developing a service through its joint venture with Comcast, Cox Communications, Time Warner Cable and Advance/Newhouse Communications so that users who subscribe to cable voice services can extend that service to their cell phones, giving users a single phone number and single voice mail service. Sprint and its cable partners are still working on underlying technology that will make this service possible.

After it completes its acquisition of BellSouth, AT&T may also want a dual-mode service. AT&T and BellSouth own Cingular. And once the merger is complete, the cell phone company will be controlled by AT&T. Like the cable companies through their arrangement with Sprint, AT&T could add a dual-mode wireless phone service as part of an integrated service package that offers customers a single phone number, voice mail, video programming on mobile devices and other advanced features.

"Broadband carriers would likely sell a converged dual-mode service as an enhancement to their existing broadband and voice services," Golvin said. "But they'll really have to explain to consumers why it's a compelling and valuable service. And that's not something that the phone companies have traditionally been especially good at."