FEATURE: Cellular/Wireless Convergence: A Q&A with Frost & Sullivan's Ronald Gruia

Cellular/Wireless Convergence: A Q&A with Frost & Sullivan's Ronald Gruia
The market research analyst sees obstacles and opportunities in an emerging market.

How are carriers addressing cellular/wireless VoIP convergence?

At this point, I think that some of the Tier 1 service providers are a little reluctant. Some of the Tier 1 service providers that I've been talking to are concerned about losing the minutes. They're worried that people who generally talk on a cellular network will eventually shift those minutes off to 802.11 metrics where those minutes will be a lot cheaper.

I think what will eventually happen is that some Tier 2 service provider will probably embrace this dual mode seamless roaming strategy and they'll start offering this. And then the other players will say "Holy smokes, if we don't cannibalize our base, someone else will, so we might as well do it. That way we can retain our customers."

There will definitely be a domino chain, but initially the big players will be only watching from the sidelines. Even when you look at the big announcement with BellSouth and Cingular -- that's really the exception rather than the rule. The disruption will come in from the Tier 2 service providers.

How do you see the market evolving once this occurs?

There will be a shift on the revenues to these companies at first. There will be less revenues on the voice side, but more on the data side, and that's good because that will drive applications growth. And it will ultimately bring more revenue to the carriers. Voice alone is not going to be the big seller.

What about the handsets?

There is an issue of battery life, but it's been somewhat mitigated by Motorola. They have this "Deep Sleep" strategy, which is a way to save on battery consumption.

Also, the device has got to be a smart device. It's got to ask itself, "Am I in an 802.11 environment or a 2.5G or 3G environment?" It's what we call ABC or "Always Best Connected." This means if you've got a strong signal for an 802.11 transmission then, of course, you would rather use this than 3G because it's going to be cheaper. And that's also taking juice.

Now, there are changes you could make to minimize this. You could make these inquiry pings less frequent. Or if you find yourself in an area where 802.11 is not available, you could even shut off this process, because there's no point in continually sensing for an 802.11 network if it's not there.

There are things you can do to minimize that power consumption, but it will take a technological leap to get it down to the same level that you would normally get on a wireless phone.

How will pricing affect the handset market?

Long story short: we need to see more carriers get involved. Once they get involved, then you'll see more volume. We'll get those economies of scale we need to see and that will get the price of the both the handsets and the services down.

Consumers are very price sensitive. In fact, many don't even pay for the cellular phones, the wireless carriers subsidize the cost of the phone with a long term contract. In order for this to become a mass application, pricing will have to come down quite a bit.

Do you feel that cellular and wVoIP convergence is a transitory phase that will eventually lead to an all IP-wireless voice service?

I don't think cellular will be phased out. The traditional networks have been engineered and architected to ensure a certain grade of service. And yes, they may not offer the same 5-nines of reliability of their wireline counterparts, but at the end of the day, they're still far more robust and resilient than an ad-hoc 802.11 network that was added on.

I see 802.11 and WiMax as complementary technologies to 3G. 802.11 is going to be more of a short range type of technology. Perhaps something you would use in a lecture hall -- a professor might want to push you an image so you can see this up close.

Ronald Gruia is program leader of the enterprise communication solutions unit at market research firm Frost & Sullivan.