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Dual mode phones taking off?

Instat came out yesterday with a report entitled “Portable Connectivity Driving Wi-Fi Chipset Market.”
The report says:

Although dual-mode cellular/Wi-Fi handsets represented only 3% of total shipments in 2006, this category will be the breakout market segment in 2007, and will reach 20% of the total Wi-Fi chipset market in 2009.

A look at the database of smartphones and PDAs at pdadb.net reveals that of 343 phones listed, 192 have Wi-Fi; of the 96 phones released since December 2006, 76 have Wi-Fi. This confirms Instat’s opinion at the top end of the phone market.

Although the smartphone market is small relative to the overall cell phone market (4% in US, 9% in Europe according to Telephia), it is still big. With well over a billion cell phones being sold in 2007, the number of smartphones will be of the order of 100 million. In another report, Instat predicts about 400 million Wi-Fi chipsets to be sold in 2009. So the 20% number seems quite doable with smart phones alone.

If FMC takes off, Wi-Fi will also become common in non-smartphones, and the volume of Wi-Fi chip sales will be even higher. But mobile network operators remain tentative about FMC; rapid widespread rollout is not happening yet. Consumers rightly see little value in FMC the way that it is currently being sold to them. FMC is more likely to be led by enterprises deploying smart phones using third party applications to extend their PBX. The mobile and fixed operators have the power to thwart this use of their networks, and some will. But the benefits of this model to enterprises are clear and compelling, so it will eventually prevail.

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Reuters says FMC “years off”

Reuters ran a story today from the FMC World Congress in Amsterdam.
The article cites very weak consumer uptake leading to the cancellation of T-Mobile’s T-One service in Germany, and weak uptake also at Neuf Cegetel. It seems strangely unbalanced, since it doesn’t mention T-Mobile’s imminent national rollout of FMC in the USA, the BT/Vodafone Fusion service and the FT/Orange Unik service. There are several other UMA deployments that would have made the outlook seem less gloomy.
The T-Mobile service was survived in Germany by T-Com’s similar service, Telekom-Vorteil, a “fixed/Wi-Fi” service that routes wireline calls over Wi-Fi, so you can use a Wi-Fi phone or the Wi-Fi of your dual mode phone to pick up calls on your home number when you are at home. This is not UMA based, and drops the call when you move out of Wi-Fi range. People like it.

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Dual mode phone trends

Here is a chart of the number of dual mode phones certified for Wi-Fi each month starting in 2004, compiled from data found on the Wi-Fi Alliance website. There is a suggestion of a trend over the first few months of 2007, but of course it’s too early to call the entry of FMC into the trough of disillusionment. In the first three months of 2007 there were 14 certifications, versus 8 in the first three months of 2006. That’s a healthy 75% year on year increase. When you look at it on a quarterly scale, the first calendar quarter of 2007 is the second best ever, beaten only by the twenty certifications in the fourth quarter of 2006. But broken down by month it looks like certifications are sliding. There has only been one so far in May.
Wi-Fi certifcations of dual mode phones

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WSJ on FMC

Today’s Wall Street Journal has a good article about T-Mobile’s UMA trial in Seattle. It says that T-Mobile may be rolling it out nationally as early as next month, despite some trial particpants’ complaints about handoff and battery life issues. T-Mobile will be offering a home router to help with QoS and battery life. I presume that for the battery life this is just WMM Power Save (802.11e APSD) since that is what the phones in the trial (Samsung T709 and Nokia 6136) support. For QoS side I expect these APs will support WMM (802.11e EDCF), but they could also support some proprietary QoS on the WAN access link, the way that the AT&T CallVantage routers do, which would be interesting.

There is some background on the trial here.

The article goes on to put the trial into the context of other FMC deployments, from BT Fusion, Telecom Italia and Orange. The article quotes a Verizon Wireless spokesman saying that they aren’t convinced that Wi-Fi can deliver high enough voice quality to carry Verizon branded calls. This is amusing bearing in mind the usual quality of a cellular call in a residence.

The article also quotes Frank Hanzlik, the head of the Wi-Fi Alliance as saying that business FMC may have more potential than consumer. I agree.

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Dual-mode phones are the key to better-sounding calls

Potentially VoIP calls can sound radically better than what we are used to even on landline phones. So why don’t they? It may be lack of will. Some say the success of the mobile phone industry proves that people don’t care about sound quality on their calls. I don’t think this is a valid inference. All it proves is that people value mobility higher than sound quality.

The telephonic journey from mouth to ear, often thousands of miles in tens of milliseconds, traverses a chain of many weak links, each compounding the impairment of the sound. First, the phone. Whether it’s a headset, a desk phone or a PC, the microphone and speakers have to be capable of transmitting the full frequency spectrum of the human voice without loss, distortion or echo. Second the digital encoding of the call; it has to be done with a wideband codec. Third, the codec has to be end-to-end, so no hops through the circuit switched phone network. Finally the network must convey the media packets swiftly and reliably, since delayed packets are effectively lost, and lost packets reduce sound quality.

Discussions of VoIP QoS normally dwell mainly on the last of these factors, but the others are at least as important. The exciting thing about dual-mode cell phones is that they provide a means to cut through them. Because they must handle polyphonic ring tones and iPod-type capabilities, the speakers on most cell phones can easily carry the full frequency range of the human voice. Cell phone microphones can also pick up the required range, and DSP techniques can mitigate the physical acoustic design challenges of the cell phone form factor. Smart phone processors have the oomph to run modern wideband codecs. This leaves the issue of staying on the IP network from end-to-end. The great thing about dual-mode phones is that they can connect directly to the Internet in the two places where most people spend most of their time: at work and at home.

So if you and the person you are talking to are both in a Wi-Fi enabled location, and you both have a dual mode cell phone, your calls should not only be free, but the sound should be way better than toll quality.

Check out the V2oIP website for an industry initiative on this topic.

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Wi-Fi Interference Experiments

Interesting new series of white papers on Wi-Fi interference from Craig Mathias of the Farpoint Group. He set up a couple of clients and attempted various activities (file transfer, VoIP, video streaming) in the presence of interference from various sources (microwave oven, cordless phone, DECT phone, another AP, a Bluetooth headset) and characterized the impairments. His conclusions were that some interference sources can completely shut down some uses (almost all of them shut down video), but that interference can be managed and does not present a long term stopper to Wi-Fi.

Missing from the tests was 802.11n. This should make a huge difference, for several reasons. First, its MIMO operation is intrinsically more resistant to interference, second 11n operates both in the 2.4 GHz frequency range (like 11b/g) and in the 5 GHz frequency range (like 11a) . The 5 GHz waveband is immune from microwave oven interference, and most of the cordless phone interference. Its disadvantage of shorter range is mitigated by the multi-path amplification effect of MIMO.

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DiVitas and enterprise-controlled FMC

Still at VoiceCon, there was a great presentation in a FMC panel by Vivek Khuller of DiVitas Networks. DiVitas has just released a product that rebuts the idea that cellular/Wi-Fi roaming requires participation by a Mobile Network Operator. Cellular companies get the vast bulk of their revenues from consumers, (though business users are more profitable) and have not been motivated to tailor their services to businesses. This offering from DiVitas, and MVNO efforts like Sotto address a gaping need in the market.

Vivek prefaced his presentation by enumerating three big-picture observations.

First, the current crop of FMC devices is actually the second generation – we just didn’t recognize the first generation, which is mobile computers. They are converged devices because they have multiple network connections: POTS (built-in modem), Ethernet, Wi-Fi and possibly a WWAN card from Verizon or Sprint or whoever. Of course the truth of this observation depends on your definition of FMC, but it illuminates the roots of DiVitas’s strategy.

Second, when you start a job at a new company, they give you two things, a phone and a computer. They get both of them through the same type of channel, which is not a service provider.

Third, Skype came out of the blue from the service provider perspective; none of their founders had any voice service provider experience, but Skype is now the biggest voice service provider in the world in subscriber count.

He then launched into his presentation, pointing out that cellular penetration in the consumer space is about 75%, while in the enterprise space it’s only 20%, even though 75% of workers consider mobility “critical” or “important,” and the chances of finding a person at their desk are less than 30%.

He gave the reasons for the lack of penetration of cell phones in the enterprise as cost, control and complexity. On the cost front, he showed us his corporate phone bills – $14K for mobile and $1.4K for wireline. He acknowledged that a lot of his cellular use was lab testing, but felt that the point was still valid – cellular service is actually roughly 10x as expensive as wireline.

On the control front he pointed out that 80% of corporations use a PBX rather than Centrex, and he felt the primary reason was control issues.

On complexity, he pointed out that current solutions require multiple devices and servers – he might easily have added that they also require multiple MNO relationships for companies with international presence.

He went on to identify three major forces of change in the enterprise mobility market that are related to these barriers: first, the massive uptake of Wi-Fi, which reduces costs and increases control; second, the advent of SIP, which together with the availability of a lot of high quality open source code, lowers barriers to entry by leveraging engineering resources and increasing control. Third, the increasing potency of cell phones, with more processing power and connectivity, which he sees as reducing complexity and cost of the overall solution.

He ended up claiming an ROI for his enterprise-based FMC solution of 6 months, which may be hyperbolic, but would remain impressive even if far longer.

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FMS and FMC

Detractors of Fixed Mobile Convergence can’t see the value in being able to walk into your office talking on a cell phone, then pick up your desk phone and seamlessly continue the call. They are right; that’s a small hook on which to hang a massive reworking of the corporate voice network. But that’s not Fixed Mobile Convergence, so it’s a straw-man argument. In Fixed-Mobile Convergence, you walk into your office talking on a cell phone, sit down, and continue the conversation on the same cell phone. The value driver is that you no longer need a desk phone – that’s a big saving.

So now you are wondering where the “convergence” is in this scenario. Isn’t this just FMS – Fixed Mobile Substitution? Yes and no. If the wireless connection remains cellular it is FMS. But the second big value driver comes in if it seamlessly transitions to Wi-Fi or Bluetooth, and stops using cellular minutes. This is FMC. The line between FMC and FMS is quite blurred. FMS has the disadvantage that signal coverage can be weak in some buildings, and if everybody in a densely populated office goes the FMS route, the cell won’t have the capacity to serve them all. But this problem is addressed by an interesting new product category called the femtocell, which is just like a Wi-Fi access point except it runs cellular frequencies and protocols. So if you deploy femtocells in your office you are going the FMS route, if you use the Wi-Fi network instead you are doing FMC. So the FMC scenario requires the phones to be dual mode (cellular plus Wi-Fi). FMS has the advantage that the phones can be cheaper, since they can leave out the Wi-Fi radio.

Another issue is who manages the cell phone. Voice Service Providers for years have been pushing a service called Centrex, which obviates the need for a PBX on the company premises. But most businesses have resisted. They prefer to control their communications infrastructure themselves. This same objection applies to FMS, but not necessarily to FMC. With the enterprise oriented (i.e. non-UMA, non-IMS) flavors of FMC, once the call is on the Wi-Fi network it is just a regular VoIP call on the corporate PBX. This means that it is billed at non-cellular rates (free on internal calls), and it can offer all the regular PBX features.

From a market segment point of view, the Blackberry is the closest thing to an enterprise cell phone that currently exists. But it doesn’t (yet) offer any PBX call features nor does it have Wi-Fi, and it is sold through and controlled by the mobile network operators, so it also fails on the score of not being controlled by the IT department.

Nokia, recognizing these issues, sells their Eseries phones not only through mobile operators but also through interconnects, the same distribution channel as PBXs. Nokia has also endowed their Eseries phones with enterprise-grade manageability (though it is with carrier oriented OMA-DM, rather than the enterprise oriented WBEM). So Nokia’s Eseries strategy still lacks PBX features on the phone. But the Eseries phones run on Symbian’s S60 operating system, for which there is a vibrant developer community, so if there isn’t yet a third-party PBX style client for it, there soon will be.

Another cell phone project taking this approach is OpenMoko. This goes even further than Nokia’s Eseries, since all the software, including the operating system (Linux) is open source.