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By Jay Wrolstad
Wireless NewsFactor
September 13, 2002

Aberdeen analyst Dana Tardelli called VoIP "the holy land" of wireless networking. "A completely new infrastructure is needed with fatter pipes. It won't become widely available until the industry offers 3G technology and beyond." In This Story: Internet Phone Systems Reaching the Holy Land Testing, Testing Pros and Cons In Search of ROI  Related Stories

The transfer of voice traffic over packet data networks, especially voice over Internet Protocol (VoIP), is rapidly gaining acceptance. The basic idea is to put a phone system on the Internet. By most accounts, the overall VoIP market will become a multibillion-dollar business within three years.

Most of that business will be conducted using landline, phone-to-PC communications, but carriers and handset makers are laboriously rolling out next-generation networks that will enable the broadband connections required for widespread wireless adoption. Still, the future of VoIP technology for mobile phones remains cloudy.

Internet Phone Systems

Dana Tardelli, senior analyst with Aberdeen Group, told Wireless NewsFactor that VoIP, which is still in the early stages of adoption for landline communications, poses both opportunities and challenges for wireless carriers and device makers.

"The technology is still getting ripe. It makes sense for certain environments, such as businesses with a lot of remote offices, and for internal call centers. But for most businesses with central locations, the value is not as strong," he said.

Reaching the Holy Land

Tardelli pointed out that VoIP cannot be implemented with existing technology, calling it "the holy land" of wireless networking. VoIP makes the data network more efficient, he explained, because it does not require a dedicated circuit -- it converts signals to packets of data instead of analog or digital signals.

"A completely new infrastructure is needed with fatter pipes. It won't become widely available until the industry offers 3G (third-generation) technology and beyond." He projected that VoIP could be delivered by carriers and device manufacturers in the next five years.

Testing, Testing

Still, some experimentation is taking place. Nextel (Nasdaq: NXTL), Qualcomm (Nasdaq: QCOM) and Motorola (NYSE: MOT) have joined forces to develop a Direct Connect product based on a VoIP architecture and Qualcomm's Qchat software. Once completed, the service will allow one user to connect to another user thousands of miles away by pushing a single button -- similar to the way a two-way radio works.

Meanwhile, Verizon Wireless is testing an ultra high-speed network, called EV-DO (evolution-data only), which is an IP-based radio-access technology. It is an upgrade variant of CDMA 20001X (code division multiple access) that promises to deliver transmission speeds approaching 2.4 megabits per second (Mbps), allowing users to send and receive massive graphics files, download multimedia content, play interactive games and access corporate intranets.

Tardelli said VoIP could be layered on top of the EV-DO platform.

Two other companies, Nokia (NYSE: NOK) and AT&T Wireless, recently announced an agreement to develop and test an "all IP-Network." This 3G GSM/GPRS (global system for mobile communications/general packet radio service) technology is based on the EDGE (enhanced data for GSM evolution) and UMTS (universal mobile telecommunications system) standards. It promises to deliver such applications as simultaneous delivery of voice and data, high-speed video streaming and VoIP.

Pros and Cons

"The quality of voice communications, thus far, has not been great with Internet calling," Tardelli said. "But VoIP is on everybody's road map, from carriers to vendors. First, they need to understand the underlying technology and how calls will change."

David Ross, director of business development at Qualcomm, said the push-to-talk service under development for Nextel is next-generation VoIP. All Qualcomm phones have packet data capability for the company's CDMA 20001X networks, he told Wireless NewsFactor, enabling them to handle calls and packet data.

"Most current phones serve as modems, operating on telephony-based standards. The new phones will have applications enabling them to run on packet data networks," said Ross. "But I'm not sure it makes sense to develop a VoIP phone. Cellular systems are optimized for ultimate capacity."

In Search of ROI

Ross added that although most major manufacturers are working on handsets compatible with Wi-Fi networks, there may not be an advantage to developing a cell phone with VoIP capability. "With cellular communications, capacity is limited to air interface protocols and the number of simultaneous calls," he said. "New standards would have to be developed for VoIP cell phones."

IDC analyst Keith Waryas said there is a potential return for carriers using the IP backbone to transfer calls versus digital signals, "but they can't just connect their base stations to the Internet. It would require new infrastructure," he told Wireless NewsFactor, "and the return on investment is not great at this point."

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Re: In Search of Voice-over-Internet Cell Phones By: zeta

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