NET2PHONE TO LAUNCH WI-FI FOCUSED SERVICE

Net2Phone is on the verge of launching a wholesale service aimed at Wi-Fi service providers that want to get into the voice business.

The service will be based on Wi-Fi handsets just starting to hit the market. Handsets will be assigned a phone number from the area code of the user's choosing and will operate either over public hot spots or any accessible 802.11 network. Like current broadband telephony services on the market, handsets will automatically register with a server in the Net2Phone network when they come in contact with a Wi-Fi access point. Users will be able to make and receive calls with charges billed to their home phones.

The service has a couple of different targets including cable operators that may not be big enough to justify building out their own telephony networks and wireless ISPs, particularly those targeting rural markets.

“Cable operators now see that they can get a piece of the action,” said Sarah Hofstetter, Net2Phone senior vice president of corporate communications.

On the user side, the service would be ideal for business travelers who often go to Asia, where hot spots are concentrated in dense urban areas. The company currently is demonstrating the service with a relatively inexpensive first-generation handset, but expects the market to grow significantly if and when big vendors produce tri-mode phones that incorporate Wi-Fi. Additionally, the company will offer up WiMax handsets when they're available.

“The idea is not to just work with one vendor out of Taiwan,” Hofstetter said.

Net2Phone's wireless entry comes at a time when it's facing increased competition in its traditional wholesale business and others are eyeing wireless. Last week at Spring VON, BroadVoice made its first significant public appearance with a service that included an announcement that it would soon offer a WISP phone, though the company didn't detail its plan.

Also at VON, Level 3 Communications announced two new wholesale products targeted at residential users that appear very similar to Net2Phone's cable-oriented products (see story on page 6). The rush to take advantage of consumer VoIP is driven in large part by broadband adoption, said Ronald Vidal, group vice president of emerging technologies at Level 3.

“With the adoption of broadband, it looks like 23 million customers are voting with their checkbook,” he said.

The frenzy is attracting new players, too. IceNet, a relatively new entrant in the wholesale market, said it is already running millions of minutes per month on its network targeted at ISPs. The company also is investigating a wholesale product targeting utilities, said Steve Holden, president of IceNet.