November 17, 2005

Mobile Industry Tests the Wi-Fi Airwaves

HONG KONG -- The mobile industry is ramping up for a new generation of cellphones and services combining the long-distance strengths of traditional cellular service with the short-distance, low-cost advantages of wi-fi.

Industry players at the 3G World Congress in Hong Kong this week were buzzing with expectation for future services that would marry traditional cellular with wi-fi, a short-range technology often associated with wireless Web surfing in homes, offices and coffee shops.

Qualcomm Inc., a maker of wireless technology, sees a clear future for handsets that sniff the air for signals then hook up to the cheapest link, Chief Executive Paul Jacobs said at an investor conference last week in London.

"The next phase is multiple airlinks, to get data to and from the phone at the least cost possible," he said.

Traditional cellular's main strengths lie in its mobility, allowing users to make calls while on the move over long distances from nearly anywhere in the world.

Wi-fi, meantime, is only usable within short distances of antennae, often called "hot spots." But it is easily installed in buildings where cellular is often absent, and its high data transmission speeds allow for more efficient file transfers and Web surfing.

Use of wi-fi could also help companies and consumers save money by transferring their calling and file transfers to local fixed-line networks at home and in the office, allowing them to bypass more costly cellular networks.

Following a recent market survey, Merrill Lynch said that "we were impressed with the proliferation of services that go beyond the carriers' cellular network such as wi-fi."


Nearly every major cellphone and telecoms equipment maker at the congress in Hong Kong is either trialing a hybrid wi-fi service or handset, or has already launched an early model or two.

Such hybridization of handsets isn't completely new, since models now exist allowing users to cross back and forth between the world's two major standards, GSM and CDMA.

But the wi-fi phones are some of the first combining traditional cellular with a non-cellular technology.

Motorola Inc. introduced a third-generation (3G) cellular model with wi-fi capability for Japan over the summer, said Michael Tatelman, general manager for mobile devices in North Asia.

"If you think about seamless mobility, you want to find the best and most economical service to deliver the experience you want at any given time," he told Reuters in an interview on the sidelines of the event.

Nokia, the world's No. 1 mobile phone maker, has also recently launched a model, and Samsung Electronics is also developing a model.

Such phones will remain a niche-product, at least for now, in a market expected to see about 800 million handsets sold this year, according to various estimates.

Canadian telecoms equipment maker Nortel is now trialing systems that can handle the switch off between the two standards, at the request of two customers, said Richard Lowe, president of mobility and converged core networks.

"It's still in the trial stage," he said, declining to identify the customers. "We're doing this because they came to us and said we need to work on this. we're also working with two major handset makers and are trialing it now."

At the carrier end of the spectrum, Sprint Nextel Corp., the number three U.S. mobile carrier, is preparing to introduce one such hybrid service next year, said Stephen Falk, vice president of global standards.

"Sprint has embraced this," he said. "We've not thought of this as a competitor technology but as complementary. ... I don't know if this is going to be a huge market or a small one. But Sprint's position is we want to play in the market."

(Additional reporting by Lucas van Grinsven in Amsterdam)