VoIP and Auctions Come to Wireless Markets

Officials from Vodafone Group PLC announced they were launching a Wi-Fi based voice over Internet Protocol (VoIP) phone service. In other news, the Federal Communications Commission got ready to end its wireless spectrum auction, while a recent report highlighted the potential risk that Worldwide Interoperability for Microwave Access (WiMAX) networks may pose to some satellite services.

Focal Points:

• Executives from Vodafone recently said that they intended to launch mobile VoIP services. The services would be based on Wi-Fi communications, extending the reach of traditional cellular services indoors. Officials said the new service would also remove fees for international roaming. This announcement is the first one by a major telecommunications carrier for VoIP services in Europe. T-Mobile USA, Inc. made a similar Wi-Fi announcement recently, but it was only for US customers. Experton Group expects more wireless carriers to offer wireless VoIP services once 4G wireless networks are deployed and capable of higher-speed data services.
• The FCC recently implemented "Stage 3" bidding rules, which are to be applied to the 700 MHz frequency spectrum on auction. This set of rules is intended to speed up the bidding process on some of the smaller blocks of the spectrum. According to FCC rules, all bidders must have at least 98 percent of their qualified bid committed in the auction. The new rules have increased the number of bids per day from an average of 10 to over 20, with the total amount of money in all auction bids at over $19.5 billion.
• A recent report based on studies conducted by the Satellite Users Interference Reduction Group (SUIRG) found that WiMAX posed a significant threat for interference to fixed satellite services (FSS) that operate in the C band. SUIRG is a non-profit organization that has members from private and public sector satellite institutions. The organization's tests found that transmissions from some WiMAX equipment could interfere with digital satellite signals up to 12 kilometers away. Based on these findings, researchers stated that FSS antennas cannot exist with WiMAX systems that range from 50 to 200 kilometers.

Experton Group believes wireless VoIP service will be rapidly adopted by both end users and companies, as soon as 4G wireless is more fully deployed. This will especially be true for international calling, since this is the areas where the biggest financial benefit will be felt. While research findings of satellite interference will be some cause for concerns, Experton Group does not believe this will prevent broader WiMAX adoption. Once FCC spectrum auctions are completed, deployment of systems to use this spectrum are likely to occur quickly, so users of this spectrum can get market penetration as quickly as possible.

IT executives should look at the cost of current voice contracts and when these contracts end, develop plans for bundling wireless and data service into future bundled communications contracts.