May 23, 2005 12:00 AM,

Triple play or grand slam?

By Sarah Hofstetter

The best chance to win and keep a residential long-distance customer is by delivering a valuable bundle with a strong brand and last-mile access. The combination of those three elements has proved successful for cable operators as they deploy the triple play of voice, video and data. But in the telecom industry, a triple play is turned by a team that's playing defense. Providers making a move on offense are transforming the triple play into a grand slam by adding mobility via wireless. In addition to reducing churn, as the triple play does so effectively, the grand slam increases loyalty and revenue by offering two kinds of service — wired and unwired.

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But providers making the move from defense to offense face a strategic question: Does the untethered service come from IP-based wireless (aka Wi-Fi) or cellular networks? The answer is both.

Many consumers today get frustrated with a lack of cellular service in their homes. In answer to Verizon Wireless' “Can you hear me now?” many customers looking for cellular reception in their homes still answer, “No.” One of the bigger near-term wireless voice-over-IP opportunities lies within the edge device — a dual-mode cellular/Wi-Fi phone that works in a cellular environment when available, then seamlessly switches to wireless IP networks when cellular is not an option, adding incremental value to the wireless home network.

Today, those phones cost upwards of $500, making them only usable for the nouveau-adopter or enterprise. The only realistic alternatives for mainstream consumers today are cell phone/PDAs with softphones for VoIP. The catalyst for driving dual-mode handset pricing down is consumer demand, which will kick in as consumers realize that these dual-mode phones help extend a cellular network's reach into their homes.

Residential customers using broadband phone service and wireless IP connectivity can use their cell phones at home by using the so-called “unlimited” minutes from their broadband service rather than “wasting” their coveted cellular bucket of minutes. With technology already available to hop seamlessly between cellular and wireless IP networks, it's up to the cellular providers to team with OEMs to lower the cost of dual-mode cell phones and integrate VoIP into the reference designs of handsets.

Cellular providers can extend their reach without network investment, VoIP providers can deliver a stickier app, handset manufacturers can differentiate their products and VoIP can be a driver for even more converged applications. VoIP providers and cellular providers may even give each other a boost in their respective battles against traditional landline telephone service providers.