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Wi-Fi phones gain traction, but at whose expense?

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The European press went into a tizzy this morning over Nokia’s newest handset the 6301 dual-mode with unlicensed mobile access technology. Media outlets like The Times of London portrayed Nokia’s slick new Wi-Fi cellular handset as a major step in the move of voice from the cellular networks controlled by the operators to the far cheaper public Internet.

That critical step, however, was made more than a year ago. Nokia’s 6301 is the second of its UMA phones—the first, the 6086 has been one of the workhorses of UMA trials around the world and was the launch handset for both T-Mobile and Cincinnati Bell’s commercial UMA services. What’s interesting about the new handset is its feature set. Instead of slapping Wi-Fi into a standard entry-level phone, the 6301 is a thin, sleek and stylish music phone that retails at the high-end of its feature handset line.

Nokia isn’t the only one turning out Wi-Fi handsets. On Wednesday Research in Motion launched its first Wi-Fi-powered BlackBerry, the 8820, over the AT&T network. Though it isn’t billed as a UMA phone, it fills the same role for data as UMA Wi-Fi phones do for voice: It offloads traffic onto the Wi-Fi network, relieving capacity on the cellular network. Samsung has its own UMA Wi-Fi handset on sale on the T-Mobile Hotspot @Home service and LG Electronics and Motorola are developing their own handsets. Those phones and many more are likely to hit the market very soon now that there are carriers actually launching UMA service, said Steve Shaw, vice president of marketing for Kineto, a UMA technology company. With T-Mobile’s nationwide launch this summer and Orange’s plans to move from commercial pilots to full commercial launches, a flood of new Wi-Fi handsets in inevitable.

“In the mobile space, you have to land a couple of whales because they are the only ones that can get the features and applications in the handset,” Shaw said in an earlier interview. “T-Mobile is certainly a company of that size.”

UMA’s voice capabilities may not be the only driver of for Wi-Fi handsets. RIM’s new BlackBerry acknowledges the need for fixed-mobile convergence in data as well. What carriers may not like about the new Wi-Fi handsets coming out, though, is that they aren’t being designed to compliment the 3G networks they’ve spent billions building—they’re designed to supplant them. The new Blackberry doesn’t have UMTS connectivity. Neither does the Nokia 6301. This week Apple CEO Steve Jobs promised to release a 3G version of its iPhone next year, but so far it doesn’t seem to see any problems with launching its highly touted handset globally using Wi-Fi as the primary data access technology.

Carriers may encourage that trend to a certain extent, said Peter Jarich, wireless research director for Current Analysis. As data usage increases, so will capacity demands on their network, and any technology, whether femtocells or Wi-Fi, that takes some of the burden off its cellular infrastructure would be welcome, he said.

“Voice is not a high-bandwidth application, and there are not a lot of new voice customers coming to the network,” Jarich said. “The big selling point for these technologies will be the data side, as there are still a lot of people who have yet to start using mobile data applications.”

Operators, however, want fixed-mobile convergence technologies to augment their mobile data networks, not replace them. That’s why it may be worrisome that the manufacturer of the most data-centric handsets on the market, RIM, seems indifferent to UMTS. Though it has launched a UMTS version of its BlackBerry for the international UMTS bands, it hasn’t done so for the U.S., choosing instead to boost its data capabilities with Wi-Fi. While AT&T is sure to encourage its business customers to offload their massive BlackBerry message volumes onto their corporate and home networks, it doesn’t want to send the signal that its 3G network is unnecessary.


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