MuniWireless

Mobile operators could see their voice and data revenues threatened if more of their customers use Wi-Fi instead of the 3G networks they have heavily invested in, according to this article from the BBC. Mobile operators were counting on a long period of time during which they could exploit their networks after having spent billions of euros in spectrum auctions. Unfortunately, with more Wi-Fi available from hotspot operators and individuals sharing their connections, many people are using Wi-Fi instead of their cellular connections to make voice calls, check email, surf the Internet and download or upload video and photos. I use Gizmo Project on my Nokia N80 to make voice calls when I have a Wi-Fi connection, and the quality of these calls is excellent.

This BBC News article outlines the threat to the operators:

“There’s a lot of wi-fi around,” said James Tagg, founder of Truphone, which lets people makes calls via wi-fi using voice over internet protocol (Voip). There are two to three million hotspots in the UK and there’s almost no office that does not have one,” he said. For Truphone and the other four firms that have a licence to offer mobile calls via wi-fi in the UK, that growth means that they do not have the job of building and paying for a national network to carry their calls. “Instead,” said Mr Tagg, “municipal governments are doing it for us.”

But although there are some people using applications such as Truphone and Jajah (also mentioned in the article), their number is a drop in the bucket compared to those who make calls using the cellular networks.

Yes, there are more Wi-Fi networks today than in the past, but much of it is still cumbersome to use (user-unfriendly login screens), and expensive too (note: many Wi-Fi operators in Europe charge much more than in the US). In addition, there’s no Wi-Fi on most public transport yet (e.g. trains) so you are stuck making cellular calls.

Municipal governments are setting up citywide Wi-Fi networks but the largest cities don’t have networks up and running yet. They are still being deployed. In Europe there are hardly any citywide Wi-Fi projects because the EU’s state aid rules create barriers to public funding of urban Wi-Fi networks. Mesh deployments are also more difficult in Europe because wireless nodes cannot emit as much power as those in the States.

Finally, Wi-Fi enabled mobile phones have just come on the market. They are still expensive. I saw an ad this week in a Dutch newspaper advertising Nokia’s latest N95: 349 EUR (with 2-year contract) or 699 EUR (unlocked). Moreover, many operators will probably “turn off” the Wi-Fi functionality of the phones or reset them so that you can connect only through that operator’s network of Wi-Fi hotspots.

So while Wi-Fi is very appealing to those of us who hate roaming charges and slow expensive 3G networks, I’m afraid the mobile operators will continue making lots of money in the near term with their cellular networks. They’re more worried about regulators than they are about Wi-Fi. Recently, the EU imposed caps on roaming charges. These caps will take effect only after the summer holidays, giving the operators yet another profitable summer during which they can squeeze anyone who has holiday plans outside their home country.

To read the entire BBC article, click here.