Just as so-called 3G high-speed mobile-phone services are starting to take off in Europe, a new challenge arrives.
Cambridge Silicon Radio, a British company, has launched a range of single-chip Wi-Fi designs aimed at mobile phones and other pocket devices. CSR's $8 UniFi chips would give mobile handsets and handheld gadgets like digital cameras the ability to communicate over public and private Wi-Fi networks. The chips could threaten the high-speed wireless services that the telecom companies offer -- and for which they paid billions in spectrum licenses.
The company claims the UniFi chips are the first true single-chip product aimed specifically at cellular phones. James Collier, technical director and co-founder of CSR, said it was apparent three years ago that mobile phones would need to interoperate with existing base stations, public or private.
It has always seemed possible that Wi-Fi networking -- which at its slowest transmits about 11 Mbps, compared with 3G's data transmission speeds of 2 Mbps -- could disrupt cellular telecommunications, just as voice over internet protocol is disrupting traditional long distance. CSR instead believes Wi-Fi could help spur demand for 3G phones and services, which so far has been slow to take off, and repay mobile-network operators for the massive fees they paid for licenses.
In April, an Analysys Research report forecast that 3G subscribers would surpass 5 million in Europe by the end of 2004, but that the numbers would remain low for at least another year.
"In order to acquire an appetite for 3G services," said Collier, "users have to want data, and yet the problem is that as soon as 3G becomes popular for voice calls, the (cellular towers) are going to get swamped. The real benefit from 3G to operators is not data at all, but being able to fit more voice calls per mast."
Voice calls, in other words, will crowd out data, making the throughput unacceptably slow. Collier believes that incorporating higher-speed, lower-cost Wi-Fi will get users addicted to data services where slower, more expensive 3G will fail. Once they're dependent on it, he figures they won't mind if some of the time they have to use slower, more expensive 3G.
Mobile-network operators, Collier said, were at first wary about working with his company to spread Wi-Fi. However, the company is now getting requests for quotations from major cell-phone vendors, which are engaged in a delicate dance with mobile-network operators over who owns the customer.
Unlike in the United States, where cell phones are typically locked into a single network operator, in Europe most customers can choose any phone they want. The details of their telephone account, along with phone books and other personal data, are stored on tiny memory chips called SIMs, or subscriber identity modules, which can be easily moved to any other phone. The upshot is that mobile-network operators don't have total control over which features consumers can get with their phones.
"Even if the operators were ambivalent," said Collier, "the phone manufacturers are always trying to steal a march on their competitors."
Still, Lars Godell, a principal analyst with Forrester Research, believes getting Wi-Fi into mobile phones will be a slow process and remain a niche market. Last year, he forecast that by 2008 there would be 296 million Bluetooth-enabled mobile phones, laptops and PDAs in Europe alone, but only 53 million wireless-networking devices, most of them laptops.
"There is more momentum behind Wi-Fi into mobile phones than I realized, but that doesn't change the conclusion," Godell said. The 2 percent of phones he thought might be Wi-Fi-enabled by 2008 might be reached two years earlier, in his new estimation.
"I don't think the mobile operators will be that keen to have it implemented," he said. "There is the potential to cannibalize both voice and 3G business. Just because it's available doesn't mean it will succeed."
He and Collier both agree, however, that there may be more mileage in uses that wouldn't involve the service provider. For example, transferring files directly between mobile devices or downloading pictures and music would be a lot more appealing at Wi-Fi speed than infrared or Bluetooth.
And Wi-Fi's appeal may even extend to making voice calls over private wireless networks, where it's easier to control quality of service.
.png){kind=logo}
