Rethink Research has published an interesting article relating the new Wi-Fi voice certification to the outlook for femtocells.

The idea of the article is that voice over Wi-Fi for cell phones is competing with femtocells, and that femtocells may win out. The article distinguishes between business voice and consumer voice, saying that service providers see femtocells as “an important stalking horse for greater control of corporate customers. ” This gives a hint of why femtocells may be unattractive to businesses: many of them would rather not yield this control.

Consumer voice service is controlled by service providers. They have three options in this space: do nothing, deploy femtocells or deploy Wi-Fi. Do nothing is the obvious best choice, since neither of the other options carries a revenue upside. But poor coverage in a home discourages usage and risks cancellations of subscriptions. So in areas of poor coverage something like femtocells or UMA (voice over Wi-Fi) is attractive to service providers. For both technologies the service provider subsidizes the wireless router, but femtocells will remain more expensive than Wi-Fi routers because of their lower sales volumes, so Wi-Fi is more attractive on this count. But UMA requires phones with Wi-Fi, while femtocells will work with any phone in the service provider’s line-up, including legacy ones. So the customers’ experience of femtocells is better - they can choose or keep the phone they want and still get improved coverage at home. This benefit of femtocells clearly outweighs the marginal price advantage of Wi-Fi routers. Femtocells may help subscriber retention in another way: a Wi-Fi router is not tied to any particular cellular service provider, while a femtocell only works with the carrier that supplied it.

The situation in businesses is different. They generally prefer to control their own voice systems, which is why they have PBXs. But a substantial number of business calls are now made on cell phones, even on company premises. These calls don’t go through the PBX, so they are not least-cost-routed and they are not logged or managed by the IT department. Femtocells don’t fix these problems, but Voice over Wi-Fi does. Not service provider Voice over Wi-Fi, like UMA, but SIP-based Voice over Wi-Fi from companies like DiVitas and Agito. What about phone choice though? Won’t corporate customers be stuck with a limited choice of handsets? The answer is yes, only a limited number of phones have Wi-Fi: less than 10% of those sold in 2008. But in the category of enterprise smart phones, like the Nokia Eseries and Blackberries, the attach rate of Wi-Fi will soon be close to 100%.

So femtocells are a good way for service providers to remedy churn caused by poor residential coverage for consumers, but Wi-Fi may be the better option for businesses that want to regain control over their voice traffic.

Instat published a report today, predicting that corporate spending on wireless voice and data services will outstrip spending on wireline services by 2010. The report is pitched at service providers, pointing out that corporate users are more profitable. Of course some service providers, like Sotto, already pin their strategy on this. The report also encourages corporations to unify their wireless spending, rather than have employees get their service piecemeal and expense it. I wrote about this in an earlier posting.

As cell phones get smarter and as they get more tightly bound into corporate networks, security becomes a major concern. This is the subject of two stories in today’s Wall Street Journal. The first tells how the iPhone is precipitating a standoff between IT managers who don’t want it on their networks, and users who want to use it as a corporate email client. The second explains how iPods, iPhones and any device with storage and a USB connector constitute network security threats.

My May column in Internet Telephony Magazine is about the Jericho Forum, which proposes a radical solution to the security concerns of the wireless enterprise.

An earlier post in this blog discussing dual mode phones mentions the trough of disillusionment as a part of the technical product hype cycle. This article from 2002 gives an amusing view of Bluetooth from the bottom of that trough; industry experts warn that it could be 2012 before Bluetooth is pervasive. It turns out that in 2007 Bluetooth will be in almost half the handsets sold. In retrospect it seems so inevitable.

The article covered its bets in the final paragraph, quoting Instat predicting 690 million Bluetooth chipsets to be shipped in 2006. Actually, by the end of 2006 the run rate was 12 million units a week. Considering it was a four year out prediction Instat’s accuracy was remarkably good.

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.

In-Stat has just published a report called “Wi-Fi for Voice: Consumer Research Around Wi-Fi Phones.”

The report finds that consumers are unenthused about Wi-Fi-only phones, which is not exactly news. This is of course not a strike against VoWLAN, since everybody will be using VoWLAN on their cell phones in just a few years.

In-Stat recently published a report on FMC. It shows most people still relatively uninterested in running voice on increasingly pervasive Wi-Fi networks, though PBX users are intrigued by the potential of dual-mode phones.