FEATURE: Voice Over Metro-Scale WiFi -- An Open Standard Alternative to Cellular

Voice Over Metro-Scale WiFi -- An Open Standard Alternative to Cellular
Tropos Networks' Ron Sege argues that the combination of municipal WiFi and IP telephony could enable wireless VoIP to compete with traditional cellular technologies.

The adoption of Voice over Internet Protocol (VoIP) has accelerated over the past few years as broadband Internet penetration has increased, technical challenges have been surmounted, prices have decreased and regulatory hurdles have been cleared.  Stand alone service providers such as Vonage (traditional VoIP using SIP and RTP) and Skype (softphones running on PCs) have initiated service. Vonage now claims more than 700,000 lines in service while Skype claims more than 40 million registered users worldwide. With the entry of the cable companies (MSOs) and other service providers into the business, IDC expects the number of US homes with VoIP service to grow from 3 million in 2005 to 27 million by the end of 2009.

Currently missing from the mix is a mobility component -- the ability to take VoIP out of the home and office. With the rapidly increasing adoption of metro-scale WiFi mesh networks, this will soon change. The combination of VoIP, WiFi handsets, and metro-scale WiFi networks will soon offer a cost-effective, open-standard alternative to traditional closed, proprietary cellular telephones. The effects of this development will be similar to those of other open-standard movements such as those triggered by TCP/IP and Ethernet. It will enable many new entrants into the mobile voice market, increase consumer service options, quickly broaden the range of applications and decrease prices through more competition. It will also enable metro-scale WiFi service providers to improve their ROI by offering additional services on their existing data-only networks.

WiFi handsets and metro-scale WiFi mesh networks will enhance the ability of wireline VoIP providers to compete in the mobile market, enabling VoIP services outside the home and office. The result will be increased ARPU, increased customer stickiness, and decreased MVNO costs. Because metro-scale WiFi requires 67 percent less capital expenditure to install than 3G wireless and requires monthly operating expense per subscriber at least 20 percent lower, these networks will be very competitive. Much of WiFi's cost advantage stems from its use of cost-effective, open standard radio technology rather than expensive, proprietary cellular technology. The simplicity of WiFi mesh networks also lowers barriers to market entry by significantly reducing the specialized technical skills required to install and operate a broadband network. Because metro-scale WiFi roll out is still in its early stages, the most likely scenario is for VoWiFi providers to offer subscribers hybrid WiFi/cellular handsets, connecting to the WiFi network whenever they can and using the cellular network otherwise. This will allow VoIP subscribers to offer coverage in the largest possible footprint, using the most economical service available in each area.

Enabling VoIP service providers to add affordable mobile service to their offering will increase consumer choice. Consumer options will be further increased because the enabling network will be WiFi, which will provide true broadband Internet access (>1 Mbps, symmetrical throughput) to their handsets for higher speed data service than cellular can offer. The increased competition from VoIP providers using low-cost metro-scale WiFi, in both mobile and, via bundling, fixed voice service, will decrease costs to consumers.

While some VoIP providers will build their own metro-scale WiFi mesh networks, others will lease bandwidth from metro-scale WiFi networks operators. These will include both private entities and municipalities. Revenues from VoIP providers will enhance the ROI of these network operators by providing an incremental income stream and by allowing them to better utilize their networks' capacity.

Wide spread use of VoIP service on metro-scale WiFi mesh networks does have hurdles to overcome. Today, cellular's footprint is much larger than that of metro-scale WiFi. WiFi currently lacks standards for Quality of Service (QoS) and fast roaming. Regulatory issues, such as E911 compliance, remain. However, things are changing fast. With metro-scale WiFi mesh networks already installed in more than 200 cities and planned in at least 200 more, city-wide WiFi networks will soon offer service in the US' more populated areas. IEEE standards committees are actively tackling the QoS (802.11e) and fast roaming (802.11r) issues, with standards for both expected in the near future. The regulatory issues are the same as for wireline VoIP and are being worked through by the industry.

In-Stat forecasts that the number of cellular/WiFi subscribers will reach more than 256 million worldwide by 2009, or roughly 12 percent of all cellular subscribers. By 2009, the firm expects that the number of subscribers using WiFi for voice will exceed the number using WiFi for data only. By offering a cost-effective alternative to traditional cellular telephones, enabling new entrants into the mobile voice market, increasing consumer service options while decreasing their costs and enabling metro-scale WiFi service providers to improve their ROI, VoIP services delivered via metro-scale WiFi mesh networks will play a crucial role in making In-Stat's prediction come to fruition.

Ron Sege is President and CEO of Tropos Networks. He is one of many speakers at wVoIP 2005, an exclusive executive summit dedicated to the convergence of wireless and VoIP. To learn more about wVoIP 2005 visit: www.wvoip.com.