How Cellular Networks are Threatened

[SOURCE: Financial Times, AUTHOR: John Gapper]
[Commentary] The Wonder-Phone is not a cellular phone: it uses a technology known as mobile WiMax -- a kind of grown-up version of WiFi. WiMax and WiFi mesh networks extend the broadband connectivity that is common in homes and offices to cities. That is good for consumers. It promises greater convenience ­ they will no longer have to search for a café with a WiFi hotspot ­ and the possibility of making voice calls on the move using Internet phone services such as Skype. Conversely, it unsettles companies such as Vodafone and Cingular. Until now, they have faced no external competition for mobile data or voice services. If people walking in cities can call each other free via Skype, why would they pay a cellular tariff? What will protect mobile operators from the same price pressures now facing fixed line companies? Cellular companies are not standing still: many sell 3G broadband services. Verizon Wireless has launched a service across 60 cities that provides a fast Internet connection for $60 per month. But Verizon is clearly wary of cannibalising its cellular revenues. Subscribers are barred from using their 3G data connections to make voice calls via the Internet. Even supporters of WiMax doubt whether it will be a direct competitor to cellular technology in the near future. By the time companies are considering whether to invest money in WiMax masts and equipment to cover many cities, cellular operators will have 3G data services in place and will be offering them cheaply enough to make it tough for new entrants to gain a foothold. But the threat of WiMax is already keeping phone companies honest: they must keep an eye over their shoulders when setting charges for 3G mobile broadband in the lucky places with WiMax or a WiFi network. The same goes for voice calls. Ultimately, it is hard to see the closed networks and licensing deals of the cellular world surviving intact. By the time 4G services arrive -- some time after 2010 -- Internet standards will have come to mobile telephony.
http://news.ft.com/cms/s/fe13000a-5152-11da-ac3b-0000779e2340.html
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