Netgear has announced that it’s accepting pre-orders for its Skype WiFi phone, which lets users make calls from hotspots without their PC. It’s no snip at $250, but like Vonage’s similar announcement of a deal with UK hotspot provider The Cloud, it’s not going to scare operators much. The big issue here is that no matter how these companies market these products, they aren’t mobile. Maybe they’re nomadic at best, but it’s mobility that lets operators charge a premium. As I’ve said before the impact of these products won’t necessarily be in their own success, but rather in how they’ll drive the cost of calls from locations that can offer broadband backhaul (like homes and offices) towards zero, or as part of a low-cost flat-rate package.
There’s something else to consider here: history. As Russell is keen to point out, Hutchison launched a product called Rabbit in the UK back in the early ’90s. The idea was remarkably similar to VoWi-Fi: the company set up thousands of base stations, and sold callers handsets they could use to make calls from within 100 meters of them. Rabbit failed within 20 months of launch, with only 2000 customers (from a peak of 10,000) at the end, and a network of 12,000 base stations, costing Hutch a loss of somewhere between $200 million and $500 million. There were three other competing services, no word on how badly they failed.
Rabbit’s big problem was that incoming calls weren’t part of the equation — they simply weren’t offered. While phones like these from Skype and Vonage can receive incoming calls, they can only do so when they’re in range and connected to a hotspot. Half the value of a mobile phone isn’t just being able to make calls any time, but also to receive them. Being able to receive calls only when you’re at a hotspot offers only marginal value over a fixed phone.
There’s another, more recent example, too: PAS or PHS phone systems, which are limited-mobility networks first developed by NTT DoCoMo. They were widely rolled out in the mid-’90s because they were much cheaper than full-blown mobile networks, but offered very limited roaming options and wouldn’t work if users were moving faster than 10 km/h. Lately, most of the world’s PAS networks have been shut down as the dropping cost of mobile service has made their limited functionality unattractive, even to low-spending users.
Now, substitute Wi-Fi for PAS, since they share many of the same network characteristics (though not one crucial one, the ability to hand off voice calls from one base station to another). So, even if Wi-Fi approaches something resembling ubiquitous coverage in urban areas, it’s a stretch to think that many people will give up their mobile phones for a VoWi-Fi phone because it might be a bit cheaper. True mobility is a premium service, and it’s one for which most users will pay a premium. Until these companies can offer real mobility, they’re not much of a threat to mobile operators.
[tags]mobile, skype, voip, vowifi, vonage[/tags]
I’m intrigued to discover what new design options become available to the UI designer when wi-fi technology becomes a (real, viable) option for mobile. So much of today’s mobile experience is driven by the fact that carriers maintain tight control on what customers have access to (games, web) and users have to pay for what data services they use. With so much of the industry based on subscription and pay-for-use models, what happens when it suddenly becomes an all-you-can-eat buffet?
Carlo,
I like the “nomadic” characterization. I’m someone who’s been quite nomadic lately, and my Vonage account has been the hardest thing to take with me. I have three choices:
1) Find an Ethernet port to plug in the terminal, and hope that the terminal is relatively close to where I want to work.
2) Get a second account for the Wi-Fi phone (Linksys makes one for $129), or
3) Pay $9.95 per month for the softphone and use a headset on my computer.
Many will argue that Skype and Vonage are two different things, but they’re quite similar in the nomadic sense. You’re still tied to a local network, and the cell phone is still the best option…unless international roaming is involved.
And I find myself standing in Circuit City or BestBuy looking at crap like these devices, wondering why our industry keeps selling incomplete solutions that require users to be integrators with briefcases filled with marginally-useful technology.
Your post is a bit too black/white:
– PHS is still growing in parts of China, which bears study, and
– To the extent that muni wifi is implemented successfully, not all the carriers would be in trouble, but MetroPCS certainly may be.
http://metropcs.com/coverage/coverageareas.php?currentNav=none
[...] As I said, not particularly straightforward. It also seems a little problematic to ask people in countries where it’s free to receive calls to shoulder some of the financial burden for cutting your long-distance bills, as you would with REBin. In any case, Rebtel provides a good illustration of the current “mobile VoIP” environment: there are plenty of solutions out there — if you want to cut what you’re paying for international calls and are willing to put up with a bit of a hassle, though admittedly there are other appear to be easier to use than this one. That’s hardly the mobile VoIP revolution that some would have you believe (and don’t get started on Wi-FI just yet). [...]
Howabout the feasibility of the phone within a WiMax environment? as has been established in Philidelphia, by the city of Phili no less, as well as a few wide spread rural locations in the Midwest. Is there any prospect of skype working within this type of network???
I do foresee a value in the nomadic nature of the phone as is, but if it can work in a much broader wirelss environment, wouldn’t mobility be addressed as well.