Tuesday, February 14, 2006

The latest threat to mobile carriers: Internet

Reuters.co.uk reports that that mid-priced, dual-mode Wi-Fi enabled handsets might be good for consumers, but could be not so good news for network operators who might "lose revenue if people do more of their calling over inexpensive Internet broadband networks."

According to Gartner and others, an estimated "20 different cell phone models will be available in 2006 that can connect to Wi-Fi, with about 20 million units expected to be sold this year alone."

Forrester has estimated that "a customer switching to Internet calls would cut average revenue per user (ARPU) in half, to $25 (14.50 pounds) for unlimited packages from $50." While the move to dual-mode might negatively impact revenues of mobile only carriers, it might make sense for carriers with both fixed and mobile networks to offer such handsets to better lock in customer loyalty. Forrester analyst Charles Golvin said, "Users are less likely to switch when it means replacing a functioning home network."

It is predicted that it will take "a few more years to make this happen, before cell-fi phones overcome poor voice quality and other problems typical of any new technology." Gartner analyst Ben Wood said, "Why bother with VoIP if the quality isn't good? In particular when cellular voice calls, with all the bucket plans that are available, are becoming so cheap?. I just don't see it happening."