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Wifi in handsets provides an alternative way of accessing the internet from your device other than the data connection provided by your cell phone carrier.  The headline advantages of this are that you avoid paying any data charges if you are on a metered data tariff (ie not an 'unlimited data' plan but one where you pay for the amount of data you consume).  The other benefit is that in general the connection speeds via wifi are faster than via your cell phone data connection.

However, there are a number of disadvantages and issues that anyone looking to purchase a phone with a wifi connection feature should be aware of:

Not ubqiutious

Perhaps the most obvious issue is that, unlike data via your carrier, wifi us only available in smaller hotspots of limited range.  Once you roam outside of that hotspot area, which might be as small as 20 meters or so, you will loose your connection.  And if there are no hotspots around then you will have to use your carrier's data connection if you need to access the net.

Still potential cost

You should consider the amount of free wifi you encounter where you live and work (perhaps you already use free wifi on your laptop).  The prevelence of such open connection varies across the world.  Remember that many coffee shops such as Starbucks and hotel chains still charge for wifi.  In these instances it may or may not be more cost effective to use your carrier data connection istead.    You should also consider that there maybe legal implications of accessing open wifi that isn't officially advertised for pubic use - in particular unconfigured home wifi routers, etc.

Ease of use

Most phones will automatically connect to their carrier's data network when needed.  Smartphones may even work best when set to remain connected all the time.  WiFi, on the other hand usually requires the user to manually connect to a desired basestation - adding additional steps and complexity to your phone's usage before you can access the internet on your phone.

Connection specific uses

Certain applications, such as mapping benefit from dynamic access as you move (be it on foot or in a car).  As such these types of applications offer little benefit if accessed solely from a limited range wifi connection.

Conversely, some applications - such as video led expeirences - benefit from the faster connections enjoyed by WiFi and may not work well when you connect via the carrier's data connection.

Security

Remember that all open wifi connections are prone to monitoring ('sniffing') by third parties - unless you encrypt the connection using SSH or a VPN service.  This is possible to do on phones, but is harder and as such you should be aware that your packets sent from your phone via WiFi are just as 'exposed' as when you use WiFi via your laptop.  Cellphone data services are less likely to be monitored - mainly because specialist equipment would be needed to acheive this and certain devices, such as Blackberrys, encrypt all connection as standard.  The carriers themselves may also encrypt your data connection - you should check if this is a concern.

If the phone you are planning to buy comes with WiFi as standard, then it's a nice extra to have.  However if you are weighing up various phone options and they include the addition of WiFi functionality, you should consider:

1. Whether your plan includes 'unlimited data' - and if so, whether you really need an additional data access option.
2. Whether your carrier provides broadband like connection - such as 3G or EVDO rev 1, which can sometimes be faster than a poor WiFi connection

WiFi is on an unstoppable course where it will reveal itself as the prevalent communications technology of choice. It is only after its ubiquitous adoption that WiFi will reveal its true power.

One must understand the capabilities of WiFi to realize its full potential. In a WiFi network, every device is not only an end-node but also an Access Point. This means that even in the absence of an organized WiFi infrastructure, a few hundred or thousand devices can act as a peer-to-peer network--each device consuming information and relaying information through a chain of other devices. Theoretically a user can send a message across town, piggy-backing on the hundreds of other WiFi capable devices which can pass the message along until it reaches its destination or times out. This sort of a peer-to-peer network of physical devices is where things will eventually gravitate toward as they did with the Internet (Napster, BitTorrent, et al) albeit this scenario will take some time to materialize and probably find initial application in a corporate space or similarly controlled environment.

While the P2P scenario does seem a bit ambitious at present, the current scenarios taking shape are no less interesting. The availability of information at hotspots being the one that's gaining adoption in the market especially at locations such as libraries, bookstores and airports. That's just the tip of the iceberg though. As city-wide networks (Metropolitan Area Networks) start emerging, all devices within that region will be online and become aware of one another. It would obviously mean that the cellular network would be facing some serious competition as a WiFi device with SKYPE installed could allow for really cheap international and free local calls through Voice over IP (VoIP). Notions such as these are obviously very scary for the mobile phone carriers and could change the game altogether. It is also one of the reasons why debates such as those around packet prioritization are emerging among others (packet prioritization would mean that all traffic intended for a particular destination such as the SKYPE network for example, would be taxed at a premium so that SKYPE calls wouldn’t be as cheap anymore—akin to duties and tariffs on Internet traffic).

The recurring theme here, however, is that all devices are aware of one another and there’s no better place where consumers could gain more from it than in their homes. Currently devices such as the iTV allow PC media to be projected to the television through a WiFi hub which caches media locally and displays pictures, movies, music, etc on the television screen. It would be no surprise if the new WiFi capable iPods unlock scenarios such as syncing across the house with other devices and allow personal media to be shared across the home stereo, television, car stereo, laptops, desktop computers, and other iPod devices. Home appliances will also get in on the act eventually and devices fitted with a brain (microchip) will start talking. The alarm clock can sync to your Outlook calendar and wake up the coffee machine in the morning to brew your favorite blend.

The challenges that lie ahead for WiFi enabled devices will be similar to those that plague the Internet and PC space, namely: viruses, security, privacy, etc. It will also impose some changes on the social landscape as more and more people stare into their devices and tune themselves out from the physical environment—or conversely, they could alleviate interaction and communication considering WiFi is cheap, easily accessible and will continually gain adoption. Buses with WiFi could communicate their exact location and estimated time of arrival to awaiting passengers; parents could locate their children in a theme park; students could walk out of the classroom with electronic lecture notes on their handhelds—all this for virtually no cost and in many cases through direct communication of devices, without having to route through a centralized network.

A WiFi-enabled handset comes with two (well, there are more, but two that matter) communication channels: The "regular" mobile network, and a short-range local wireless network. That is WiFi. It allows you to connect to other equipment that is relatively close to you, and while it does not by default offer the security and guaranteed connection of the mobile network, it does offer more bandwidth and a network which is tailored to data transfer (rather than voice). And the setup is (usually, though not necessarily) less complicated than Bluetooth. Also more devices in the home support it. For your photo (and video!) uploads, putting MP3s in the phone, and so on - WiFi is better, if you get it off a computer in your home (which may also have a WiFi connection - but beware that the file sharing is not easy to set up in any case). Voice quality still leaves a lot to desire over the mobile phone connection, though, and with a flat rate plan, you will probably end up using WiFi for downloads, and the "regular" phone connection for voice, mail, and SMS (this also means you do not save any money over making VoIP calls with the phone, sometimes marketed as its biggest advantage). But the best thing is that with some handsets you do not have to care! They are smart enough to take care of this automatically.

 Actually, it is a rather good idea.

 Hope this helps.

//Johan

1. Seamlessly integrated user experiences. Think iPhone + iTunes.
2. Voice over IP (VoIP).

• The one-touch experience: To quote Apple: "The iTunes Wi-Fi Music Store on iPhone puts a music superstore in your pocket. Just find a Wi-Fi hot spot, tap the iTunes button and you can browse, preview, buy, and download music on the go." That’s a feature I’d love to live with. It’s also what I call a "seamlessly integrated user experience."

• Voice over IP (VoIP): VoIP is here to stay; its economics are that brilliant. What would you prefer: lengthy yet inexpensive conversations over a Wi-Fi backed VoIP connection without touching your cell phone minutes (even when you are on roaming) or short expensive conversations over the regular cellular network that burn-up your cell phone minutes? I see Wi-Fi as a critical success factor for the VoIP experience on a cell phone.

• Faster and smoother Internet browsing experience: At 54 Mbps, Wi-Fi beats the daylights out of EDGE (max 384 Kbps) and EV-DO (max 2 Mbps). The higher speed provided by Wi-Fi makes possible rich applications and location based services.

• Reduced battery life - Wi-Fi components consume more power.
• You don’t get that fast Internet everywhere - Wi-Fi is not omnipresent yet.

• Complexity in configuration and troubleshooting - as a general "non-techie" consumer would you wish to spend your time configuring DHCP, DNS, WEP, WPA, WPA2, HTTP Proxies et al. before getting to that song on iTunes? Wi-Fi is infamous for its configuration headaches.

What's So Great About WiFi Equipped Cell Phones?

With practically everyone losing their minds these days over feature rich phones boasting everything from Bluetooth to PDA to Music/Video Player functionality, it would seam a foregone conclusion that WiFi will be the next “Must Have” in any new cellular device. And why not – with free and low cost hotspots dotting the landscape around the globe; it's only logical that consumers should be able to take advantage of this ubiquitous 802.11 goodness?

Sounds cool, right. Now that your even more convinced of your need for a WiFi enabled mobile – prepare for your hopes to be dashed. Here is the dirty little secret that your mobile carrier doesn't want you know; WiFi is not a welcome addition to their business model. Think about it? If you are able to access your favorite services like web, email and (heaven forbid) VOIP via free WiFi access points, what do you need those expensive voice and data plans for?

Skype on your mobile phone plus WiFi equals no revenue for carriers. Up till now the relatively limited number of higher cost PDA style phones capable of running both WiFi and a VOIP client have posed enough of a bearer to entry so that wireless providers have been low key about the threat. However, as more next generation handsets begin to offer WiFi at lower price points, a whole new front on the consumer rights war is about to open between carriers and customers. Cell providers, who already infuriate consumers with costly contracts and locked phones, are not about to lose out on potential revenue on both voice and data services – not without a fight at least.

In addition to the financial threat that WiFi enabled phones pose to wireless providers, there is the intangible marketing value they place at risk. With WiFi enabled phones, arguments that carries like to squabble over, like Edge vs EVDO, become irrelevant. Since even the slowest 802.11 speeds are multiples faster then any “3G” technologies on the horizon. Why do I care if my network is 1XRTT or GSM-GPRS, I'm not going to use them anyway.

Screwed again! Since WiFi enabled phones pose such a clear and present danger to the established wireless providers, you can be certain that they will oppose them, or if they do provide them the best interoperability functions will be crippled. Since the vast majority of cell phones are purchased from, or in conjunction with wireless carriers these “nerfed” or crippled mobile devices will have limited value to consumers. Which truly does beg the question, “What's So Great About WiFi?”

Emerging Trends:

What's so great about WIFI? 

Freeing the user from corded networks, allowing wireless PC to PC connectivity, wireless printing, wireless network storage, and the newest trend auto switching IP cellphone networks.

Maybe your in a poor cell service area, or you'd like to utilize the "free" WIFI network at the local coffee shop to place your cell calls.  Lost and need some directions, check online maps, email, and stocks on your WIFI enabled cell phone.

The next generation of cellular phone service will be a mixture of tradition cell service, and WIFI. Many enterprise networks have been utilizing IP to provide their telephony needs as well. The iPhone as well as the HTC6700 have incorporated WIFI, and service providers are using this technology to provide download able content. Everything from games, applications, to music downloads are available

Remember the not so antiquated analog to digital cell phone auto switching. The next step will include auto switching from the cell network to the WIFI network to handle your call. This technology is already being provided though limited and somewhat difficult to initially setup, it further serves to free the end user.

The Cloud

The question is what constitutes a 'normal' user:

Is Wi-Fi something consumers should be seeking in their next handset? Is it a useful feature for non-techie, non-enterprise, "normal" users?

People become 'techie' when they learn that they can get high rates of data speeds from their cell phones and PDA's for less money with faster data speeds when they can use muni wifi. Word of Mouth, Viral they hear from friends that it is possible, even if they are not tech savey, they will find someone who is to do the job.

Cell phone service providers in the USA keep their customers within the 'walled garden' of their networks due to the fact thatmost cell phones in the USA are locked. Unlocked phones cost more money and now with the iPhone, the word is getting out that these phones can be unlocked.

I have a friend who as a T-mobile account in London that he activated over the Internet, where he is able to have unlimited cell phone use through a VioP account for US $40. per month. He lives in NYC, where there is a small wifi 'cloud'. He loves it, and has converted many of his friends (including me) so that I am able to use my cell at home basically for free. I am not alone.

 The issue here is not so much practicality and convenience  in the US market, but that fact that you are able to have great access to the Iinternet and VoiP  outside the  bounds of 'The Walled Garden', that  'The  Man' becomes less of an issue, that you are in control of these services and it is possible to  be free of the brutal cell phone carrier contracts that are the rule in the USA.

Wi-Fi functionality for cell phones sounds like a great idea, but in practice there may be some drawbacks.

1. Wi-fi connections are frequently slow unreliable. Occasional disconnect time-outs can sometimes make Wi-Fi slower than ordinary cellular network connection. Many times I have opted to connect my laptop to the internet using my cell phone because the Wi-Fi service was unreliable or slow. While this may be the exception rather than the rule, Wi-Fi cell phone customers will expecting fast Wi-Fi all the time.

2. Currently, it is illegal to use a Wi-Fi connection without permission. People occasionally get arrested for "stealing" Wi-Fi service. If Wi-Fi becomes widely available on cell phones, people will knowingly and unknowingly "steal" Wi-Fi service. This would probably cause the laws to change, but not without some high-profile incidents.

3. Effective internet bandwidth over cellular networks will be increasing significantly over the next several years. This will likely give Wi-Fi phones a relatively short lifespan.

4. For many cell phone and PDA users, the limiting factors for internet use are input (lack of keyboard) and output (small screen) rather than bandwidth.

Do you need or want Wi-Fi in your phone? On the face of it, being able to surf the web, download music, make free VOIP phone calls etc at no cost from your own or other free hotspots sounds too good to be true. I've been using Wi-Fi on my phone for a while, and the old adage "if it sounds too good to be true, it probably is" can apply.

Here are the perceived advantages that Wi-Fi on a phone might allow you to take advantage of:

1. Faster data speeds

On the face of it, yes, 54 Mbps is faster than the fastest 3G technology currently deployed. But, that's just the maximum possible speed between your phone and the Wi-Fi router, if that router is sharing a 500 kbps dsl line with a load of other users you'd actually be better off using 3G. There's also the issue of range and coverage, the frequency band that Wi-Fi uses is quite congested and is easily blocked by walls, I actually have coverage in more of my house from my telco's 3G masts than my own Wi-Fi router.

Still, on those rare events when you have a nice fat Wi-Fi signal and you need to copy some big files like music, videos or podcasts to your phone, Wi-Fi can be handy. But, for general web surfing the perceived speed advantages of Wi-Fi over a 3G signal are barely discernable.

2. Use of free hotspots

Do these really exist in sufficient quantity to make use of Wi-Fi when you're out and about worthwhile? That's not what I've found, sure I know a couple of bars and coffee shops with free Wi-Fi, but I know far far more places that don't have free Wi-Fi, but do have good 3G coverage. Frankly if you're not in a basement, you're likely to have usable phone coverage pretty much anywhere in Europe.

3. Free phone calls with VOIP

If you use a service like Gizmo or Truphone with your Wi-Fi phone you can get free or very cheap phone calls, but whilst you're making these calls you're not using a "mobile" phone. If you walk too far away from the Wi-Fi hotspot you're using the call will just drop. Technologies like handing over a call to the next cell just don't exist in the world of Wi-Fi. Plus, when you're not connected to a Wi-Fi hotspot incoming calls to your VOIP phone number will be diverted or sent to voicemail (possibly at a cost to you). What good is a mobile phone that can't take incoming calls?

4. Free data

I can't dispute this one, if you're connected to a free Wi-Fi hotspot, you can download content onto your phone with no data costs. But, most mobile phones don't have a hard disk or the battery life to really take full advantage of this "free data", and unlimited usage data tariffs effectively give you free data over your 3G connection anyway.

So are there other downsides to having Wi-Fi on your phone? Unfortunately yes, battery life is probably the main one, Steve Jobs might try to kid you that 3G is a real battery hog, but Europe has had 3G phones for years, and all the evidence points to Wi-Fi chipsets being far thirstier in power usage than 3G. The only case when 3G chipsets are power hungry is in very poor coverage when the phone is hunting for available signals on both 2G and 3G bands, which frankly is a rare occurence in Europe.

Wi-Fi configuration can also be a pain on some phones, connecting to open Wi-Fi access points is an easy enough task, but entering the 16 or so digits and letter of a WEP or WPA key to access a closed access point on a phone's keypad can be rather trying.

So, would I demand Wi-Fi on my next phone? No, but if it was there, I'd use it. There are certainly more important features for me on a mobile phone, but Wi-Fi can be useful.

What's so great about Wi-Fi...let me see. You know, I used to love Wi-Fi, and was an early booster back in 2000. That's back in the days when Wi-Fi was designed to successfully meet a market demand: a non-tethered Ethernet connection within a limited location using unlicensed wireless frequency.

This usage scenario led the way to Hotspots, for which technology is very well suited but the business models were ridiculously inadequate and too grandiose. Next up, the dreamers imagined Muni Wi-Fi killing off mobile telcos, and that idea was also ill-conceived. So it seems that lately, despite loving WiFi for what it was meant to be, I've been bashing WiFi for how people have misused it.

Strangely, one of the main things characteristics of WiFi that is often considered a negative, is actually a feature of the technology when the tech is used correctly: short range. The fact that WiFi is short-range is actually the only reason we can all use it in our homes and offices simultaneously. If it were wide-range, then we would be interfering with each other all over the place. WiFi uses something I like to call WDMA (Wall Division Multiple Access) which is a method of sharing the same bandwidth because a wall or two separates us and keeps your signals from interfering with mine. Thus, we can all set up cheap untethered Ethernet access in our homes and offices...as planned from the outset.

On the client side, over 300 Million Wi-Fi client devices have now shipped, which is nothing compared to cellphones, but it is still a significant achievement, which has contributed greatly to the economy that improves the technology, provides scale economies, and offers an addressable customer base with pre-paid CPE.

Yet, as times have moved along, Wi-Fi is still best used in the context of private WLAN networks, and small Hotspots and a few HotZones. We're seeing a steady increase in Hotspot density despite the hype cycle of public Hotspots dying down, and even though "Muni WiFi" has over-promised and under-delivered, it IS increasing WiFi's footprint. Meanwhile, WiFi radios have decreased in power, size, and cost to the point that they can be fitted into handsets. These handsets can be either dedicated WiFi phones, Smartphone PDAs, or hybrid cellular/WiFi devices. The hybrid camp can be further split into those that are UMA enabled to pass calls off between WiFi and cellular, and those with silo-ed WiFi and cellular radios. I'll have to address each device type separately:

WiFi Only VoIP phones: These devices come from vendors typically associated with IT and networking, such as Linksys, Belkin, and also UTStarcomm, among others. They are usually designed to work well with only one particular VoIP provider, like Vonage or Skype. They can take advantage of a Wireless Local Area Network (WLAN) to operate much like a conventional cordless phone, but calls are much cheaper or even free. For people who make a lot of international or LD calls, there is value here. But the devices don't have the mobility of a cellphone, and once you leave your home or office, you will lose signal. When roaming, the phones will require a totally open, unprotected, unauthenticated WiFi Access Point to work. These are not common outside of people's homes, and most public hotspots are either paid, or have a splash redirect web page that a user must see and use before unfettered access is permitted. Sooo, you can't really expect to use these phones much more than in the places where YOU control the WiFi: home and office.

Smartphones: Basically a phone with a built-in PDA, these are the range of devices with increasing presence of built-in WiFi. It makes sense, since these are the most expensive phones on the market, and they are loaded with the most advanced features. WiFi is a good fit on these phones, since they usually also have a range of data applications, and a good web browser to take advantage of the fast data connection. The iPhone comes to mind as a recent example, but let's not forget great models like Nokia's N95 using the Symbian, or any of the Windows Mobile smartphones with WiFi built in. Not limited to home or work, the user can take advantage of the full-featured UI to log into free Hotspots with a ToS page, and other public Hotspots that may cost around $10 a day. But where these devices shine is in the fact that they have open platforms, so users can install a range of programs like Google Maps, Instant Messengers, or EQO, Fring, or Skype. These are all communication apps that allow the user to route communications over the WiFi data channel, whether it be text messages, IM, or voice calls. This could lower the cost for the user. Some users could choose NOT to buy a cellular data plan (HSDPA runs $40/mo), and exclusively rely on WiFi for their data fix.

Hybrid WiFi/Cellular: These devices are quite rare, since as you mention in the question, cellular carriers don't have much incentive to subsidize them. For the most part, if carriers do back a dual-mode hybrid phone, it is one with a UMA-based FMC (Fixed-Mobile Convergence). These phones are likely to be demanded by and sold to the enterprise customer, whose purchasing agent and IT department want a simple device that uses the WiFi at the enterprise campus and cellular outside. Companies can assure strong wireless coverage inside their buildings because they can easily deploy additional WiFi APs to fill gaps. Often this device will be linked to a IP PBX system and function like an internal extension phone. This is an emerging market.

UMA: The UMA standard, promoted by a company called Kineto, is technology by which a call can be seamlessly handed-off between Wi-Fi and cellular, in either direction. Both the Wi-Fi and cellular silos on the phone are joined, and are now represented by a single phone number and account identity - an important feature. So far, this has been deployed by only a handful of operators worldwide, and mostly those that have some vested interest in moving traffic off cellular onto fixed infrastructure. For users, this service ostensibly offers cheaper calling while tethered, and faster data speeds. One of the other key advantages is that a strong signal can be almost guaranteed within the home, even if the cellular signal doesn't penetrate the building well. A downside is that the service requires a specific, carrier-provided Wi-Fi access point, so that you wouldn't connect at your uncle Frank's place over his open Wi-Fi. Another big downside is that there is additional cost in the network, and in the handset. And let's not forget that consumers love choice: they want to choose the prettiest, shiny color in the handset model that fits their hand. But won't they be disappointed to learn that UMA is only available in a small subset of the handsets on offer for cellular. Yeah...I'm somewhat un-enthusiastic about UMA (read my notes below to hear another story why.)

Notes:

Euro Carrier Findings: I'm not at liberty to say which carrier told me this, but a Western European carrier, formerly the PTT, with domestic wired and wireless phone service and continent-wide WiFi Hotspots had the following experience with a UMA pilot project. They asked the people who tested it if they liked it, and the response was positive. But interestingly, the users were indifferent about the "seamless hand-off" part of UMA. That's the part of UMA that makes UMA, well, UMA. Apparently, the users liked the better in-building coverage that WiFi offered, the cheaper calling costs of WiFi, the faster data, the single number for home and mobile use (FMC), but they didn't frequently need to start a call at home, and roam it to the cellular network, or vice versa. This carrier wanted to leverage their cellular assets, but realized they could do this much cheaper by taking the UMA out of their FMC, and offering something similar without seamless hand-off.

Bouygues Response: France Telecom's Orange did all the investment and work in deploying UMA in France, and launched it with much fanfare on a couple of handhelds. Some customers were attracted to the offer, and began to churn other carriers to get the cheaper in-home calling that Orange's UMA offered. What did cellular-only competitor Bouygues telecom do in response? They offered a new pricing scheme that lowered the cost of calls made from the home cell. It turns out, this is mostly used during off-peak hours, and so required no additional expenditures on extra cellular capacity. This stemmed the churn. Wow, one carrier invested big in a technology that offers FMC, integrated it into their network, and offered it on a limited number of handsets, while the other simply tweaked their billing database to match the offer. Which would you rather do?

BT, Swisscom, T-Mo USA: Some of the names most active in FMC are notably outliers in the telecom world. BT, for example, is a fixed player with no mobile assets. This type of telco suffers no cannibalism by pushing WiFi solutions that take traffic off a cellular network. In fact, as an MVNO operator in the UK, they actually can use FMC to take traffic off of the cellular network, where they pay wholesale per-minute rates, and put it on their own copper infrastructure (that was amortized long ago). Swisscom is a small national player with fixed and mobile assets, but they are also the operator of a number of WiFi Hotspots around the EU. T-Mobile USA is the most visible operator of Hotspots in the US, plus they were notoriously spectrum-constrained for 3G services. No wonder they sought to move both voice and high-speed data traffic to WiFi in a FMC play. The majority of carriers worldwide just aren't that interested in moving traffic off of their cellular networks -- where they've set up a system of walled gardens and tolls -- and moving it onto an un-metered WiFi network. Just look at AT&T and the iPhone: it has WiFi, but you can't do much with it.

Cost per minute: The consumers (this is a US-specific point) have very little incentive to shift cellular usage to Wi-Fi networks. For one it sounds complicated, two it makes a bigger phone, three it uses battery, four it limits phone selection, and five...there is no financial incentive -> US customers pay, on average 7 cents a minute for mobile use, but a study a couple of years back showed that 75% of bought cellular plan minutes go unused every month. And Metro PCS even offers unlimited calling for $35/mo - basically zero cents per minute. (Q) So how do you convince a US subscriber who has a 550 minute plan, and only uses 200 minutes that it makes sense to shift usage to WiFi? (A) Until Smartphones become predominant, and mobile data becomes much more widely used, I don't think you can.

That's my 2 cents worth...and $99.98 your change.

__________________
Derek Kerton
The KERTON Group
Strategy - Partnerships - Marketing
for Wireless and Telecom
www.kertongroup.com
__________________

I have an iPhone because my father is an Apple nut... but if I'd had my own $500 to spend I'd have an iPhone because it does what all Apple products do, dumb down the tech knowledge required to operate a great piece of machinery with an excellent user interface.  

Text messages and email and what not are great on the phone, but the real benefit is the web browsing...and for a person who hasn't yet had the benefit of web browsing, let me tell you: it's worth it.  I no longer get lost, I no longer can't find a restaurant number, and I'm no longer bored on the bus.   

I never had a web enabled phone before.  I didn't know how slow cell networks were.  Steve Jobs and Apple got around this by having the phone be Wi-Fi enabeled.  Wi-Fi is that wonderful thing that lets you search google and play on facebook without being plugged into anything.  On your cell phone, it means your internet is as fast as your computer, without using cells to slowly load graphic heavy webpages.   Sounds great.

 BUT

 Unless you live in Silicon Valley, you probably can't move from wireless network to wireless network.  I live in Seattle, a tech happy city, and only when I'm sitting someplace where I know there's free wireless can I possibly hope to connect to it.  Wi-Fi for cell phones is pretty clunky... my iPhone is constantly asking me to connect to a Wi-Fi network, but they're almost always locked (require a password) or have such low signal strength that I can't connect to anything anyways.  So, I always cancel it, and just search the web using the cell network.

The moral of the story is that searching the web on a phone is awesome, but the handset is pricey.  If you're a non-tech person, even if you're a tech person, unless you live in an area flooded with FREE Wi-Fi access it's not going to help you, and the cell networks move fast enough for the quick searches (i.e. the address of a certain store you're driving to) that, as long as you can maneuver the internet simply on your phone, it'll load fast enough.

 In a few years, when city wide Wi-Max is available, splurge on a Wi-Fi enabled phone.  In the meantime, but a phone for other reasons.

Wifi is the hot new option that most people will never use on their cell phones. I consider myself a techie and have had wifi on my windows mobile devices for some time now. I was really excited when I heard phones will soon have wifi on them. At that point I had a Ipaq PDA with a Wifi pcmcia card that slipped into the case - can you imagine how HUGE this thing was?

The thing was that was my ONLY connection to the net, My new Windows mobile device has GPRS, Edge, 3g and Hsdpa so 9 times out of 10 I don't even think about Wifi or enabling it. But if I am in a place where I can only get Gprs I will attempt to connect via wi-fi. It almost never happens. Yet Wifi is still a selling point for me and something I look for in a new phone. Go figure. Chalk it up to marketing.

Most users that have these connected PDA's also have unlimited data plans so cost is not a concern when everything is all inclusive. Normal users as you put it would not have a use for wifi nor would they be able to activate it. BUT, as more and more multimedia options via mobile become available we can also assume that wifi OR faster wireless options will become MUCH more wide spread. Remember most people do not know what HSDPA is yet!

What happened to wimax? High speed wifi for everyone?

Why Wi-Fi Scares Your Wireless Operator (But Is Good News For The Rest Of Us)

Five years ago I sat in the UK head office of T-Mobile, listening to George the product manager. George was earnestly explaining Wi-Fi hotspots, a technology he believed would disrupt the telecoms market and generate lots of money as a consequence. Wi-Fi hotspots are tiny radio stations that connect computers to the internet at broadband speeds without needing wires. George's theory was that it offered the prospect of a great new service to customers, but would not need to be backed by the same kind of serious spending commitment normally needed when rolling out a wireless network. In a normal wireless network, coverage is a vital selling point. In contrast, Wi-Fi hotspots work across a very short range, so the selling point would be the very high levels of performance relative to even 3G. Hotspots would hence be based in places where people were away from home, where they congregated in large numbers, but would be likely to sit still for extended periods whilst they accessed the internet. That means places like hotels, bus stations, or libraries. George did not need to labor his explanation of Wi-Fi, because the idea was not invented by telecoms businesses (although telcos often think they invent every good idea). The Institute of Electrical and Electronics Engineers developed the 802.11 wireless network standards some years before. Fortunately, some businesses clubbed together afterwards and gave 802.11 the much sexier name of "Wi-Fi". Lovers of acronyms should be aware that Wi-Fi is also known as Wireless Local Area Networking or WLAN. Whilst George was diligently explaining the benefits of Wi-Fi, I was biting my tongue and resisting the temptation to point out that my laptop was already Wi-Fi enabled. In fact, earlier that year I had been in LAX airport, sharing a beer whilst waiting for my flight and chatting with a software developer from Austin, Texas. He raved about how Wi-Fi had literally freed him from his desk. But whilst this amiable Texan could show me his laptop, he could not show me Wi-Fi in action. This is because public hotspots - the radio base stations that users connect to - were yet to become common, and there certainly was no coverage in that particular LAX bar. Which is why George and T-Mobile thought they would make a lot of money. Their plan, as George explained, was to build hotspots all over the world, and charge people for using them. As I tried to point out at the time, that seemed like a pretty risky way to increase revenues. Spending lots of money on building networks is what makes operators special. If anybody can build hotspots here, there and everywhere for very little cost, then anybody, and everybody, will do it. That makes it harder for any single business to charge a premium for using their hotspots. More likely, people with Wi-Fi enabled devices will get great wireless broadband access in many new places, but pay little or nothing. Worse still for T-Mobile and other networks, customers would eventually realize that internet connectivity can be used for far more than just browsing the web...

Fast forward five years and T-Mobile, like other networks, are still trying to, and sometimes succeeding at, making money by selling Wi-Fi access to laptop users. They also have many competitors, some traditional, some not so traditional. This has lead to a proliferation of hotspots. McDonalds has 15,000 Wi-Fi enabled restaurants worldwide. T-Mobile has a deal to provide hotspots throughout Starbucks in the US, and Starbucks has similar deals with T-Mobile and other providers in other countries. Whilst the number of hotspots has grown, so has the number of devices able to connect to them. It used to be that only laptops and PDAs came with Wi-Fi functionality. Now an increasing number of smart phones and other hand held devices come with Wi-Fi as standard. For examples, take a look at Nokia's range of Wi-Fi enabled phones or the new Apple iPhone-that-is-not-a-phone, also known as the iPod touch. During those five years you may also have noticed that fixed-line providers have taken a hit because some broadband subscribers have started to use clever IP services like Skype to make calls for free. It does not take a genius to work out that if Wi-Fi enables you to get broadband access on the move, and your cellphone can also connect you to a Wi-Fi hotspot, that some people will want to start using services like Skype on their cellphone and so cut the costs of traditional voice calls. So whilst investing in hotspots seemed like a great idea to George five years ago, it may not seem so great now. Though not common yet, Wi-Fi enabled mobile devices raise the prospect of saving customers a lot of money when making calls. It also means that customers can reduce the expense of using data services on the move. Hotspot operators may try to block access to certain kinds of IP service, but their problem is that low costs mean competitors can enter the market and cause further disruption, much like George hoped to do five years ago. That means if one telco tries to preserve its margins by restricting what can be accessed via its hotspots, a rival business may be able to steal customers and revenues by offering hotspots without restrictions. They also can go one further by offering hotspots that are free.

Not just commercial operations are interested in the potential of Wi-Fi. In recent years, there have been several prominent projects to provide Wi-Fi access across whole cities. These municipal projects have met with mixed success. Cities like Auckland in New Zealand and Philadelphia have successfully implemented Wi-Fi across wide urban areas. In contrast, proposals for Wi-Fi in cities like San Francisco have faced criticism or wrangling over funding. Often local government wants to provide a free or low-cost internet service as a way to provide connectivity to all citizens, thus improving the prospects of the poor. However, concerns about such diverse topics as privacy, use of advertising as a way to generate returns for investors, and longevity of contracts between cities and suppliers have slowed if not stopped the anticipated wave of municipal roll-outs. In August, Earthlink, a service provider set to build some of the municipal networks, announced it was restructuring in order to cut costs; this also means increased scrutiny over whether its municipal projects really will generate sufficient returns on investment. However, it is not necessary to roll out Wi-Fi on a grand scale to undermine the business model of those wanting to charge for it. A small business, like a cafe or a guest house, may give Wi-Fi access for free as an additional way to attract customers. They will probably find it easiest to give the service away and hope to increase conventional sales; they will lack the resources to generate revenues directly from selling Wi-Fi connectivity. Furthermore, some domestic WLAN users freely allow others in range to connect to their home network. Whilst for a minority this is an act of pure charity, for most it is because they have failed to set up their security correctly. There are business models that encourage users to share access to their home networks. Customers of the provider FON agree to a reciprocal arrangement where every FON customer can roam for free on every other FON customer's home network. Customers can also get a share of the revenues earned when other Wi-Fi users pay to access the internet through their home WLAN. This model has attracted the attention of big telecoms operators wanting to disrupt the market. Recently French service provider Neuf Cegetel agreed to partner with FON, thus giving 600,000 customers the opportunity to opt in to the FON model. This was topped on October 4th when a similar deal was reached between British incumbent BT and FON to create a Wi-Fi community that will give 3 million subscribers the option to join. Deals like this give fixed-line telcos like BT the opportunity to steal back revenues from wireless providers by offering mobile phones that also provide voice and data services via Wi-Fi whenever possible. These phones can connect via Wi-Fi to the subscriber's home network, or to the provider's own hotspots, or to the home networks of fellow FON users. Only if there is no Wi-Fi hotspot in range will the phone then try to connect to a normal 2G or 3G wireless network. This means cheaper call costs for users and enables fixed-line providers to compete without incurring the costs of building a full wireless network with near-universal coverage.

It is not all upsides to using Wi-Fi for wireless voice and data calls. Many customers will dislike the relatively poor level of support they receive compared to typical wireless services. Speeds for data transfer can be great, so long as not too many people are trying to use the same hotspot. That also assumes you are within range of a hotspot, which for users away from home is only likely in cities and even then only in public places. However, if customers can accept they typically get what they pay for, then phones that can switch to Wi-Fi in preference to 2G or 3G network connections offer a simple way to cut costs. As more people adopt Wi-Fi and run their own home networks, so coverage will inevitably grow and the benefits of adopting Wi-Fi increase. On top of this, increased competition will drive costs down. After all, charging customers to use Wi-Fi may not be a good way to get their loyalty or their money if the rival business down the road gives them unfettered Wi-Fi access for free. The first signs are emerging that even the traditional corporate models for generating revenues from Wi-Fi are having to become more flexible. Starbucks profits from charges for using its Wi-Fi hotspots, but in a deal with Apple, people will be able to browse iTunes for free in Starbucks. The thinking here is pretty clear - better to give the access for free and make a margin on music downloads than to charge for access and hence impede lucrative iTunes sales. McDonald's has gone one better in the United Kingdom. McDonald's announced on October 6th that they will provide Wi-Fi internet access free of charge in all their 1,200 UK restaurants. This will make them the largest provider of free hotspot access in the UK, representing about 10% of all hotspots in the country. Clearly they think that there is more profit to be made from selling burgers than bytes, and that they will be enticing customers to come and spend more at relatively little cost. This will put pressure on other Wi-Fi providers to follow suit. So it looks like bad news for George, as the days of selling access to Wi-Fi hotspots may be coming to an end. Worse than that, those hotspots will also take voice and data revenues from wireless network operators by offering similar or better quality services at a fraction of the price. For the rest of us, it looks like the spread of Wi-Fi is very good news indeed.

I'd like to take a contrarian view here suggesting that Wi-Fi functionality does NOT offer much for users, and in most cases can / should be left off of phone offerings - even for advanced users.    A big exception covering a small number of users would be those who a lot of international calls from  home and thus could avoid high cell charges in that fashion. 

Here's my reasoning as we address each of the key points noted above:

1) Wi-Fi offers faster data speeds than cellular networks.   This is generally true and would be an asset if Wi-Fi had more functional implementation and access standards and users had the patience and temperament to configure the handset as needed.  However in many cases trying to connect in this fashion rather than simply using the normal signal will be more than the user wants to do.    Also, advanced users will increasingly have high speed via the normal cell signal, making the occaisonal switch to Wi-Fi simply an inconvenience.

2) Use of free hotspots instead of paying their operator for data service.    Data services are generally "all you can eat" or cheap and are getting cheaper.   Only a user who regularly visits the same Wi-Fi location and stays there a long time would generally reap much benefit from this.

3) Is Wi-Fi something consumers should be seeking in their next handset?    No with some exceptions for certain users in certain areas.

4) Is Wi-Fi a useful feature for non-techie, non-enterprise, "normal" users?    Generally no for reasons stated above - non-techies won't happily go through *any* configuration steps to access hot spot Wi-Fi.   Seamless Wi-Fi integration is not technically feasible at this time.

5) What are the benefits and drawbacks?    Slight monetary benefit and in some cases a strong bandwidth benefit, but on balance Wi-Fi enabled devices will require more tech configuration and higher costs.   Only if the Wi-Fi could be totally and seamlessly integrated with the device would the benefits likely outweigh the relatively modest advantages.

6) Please explain Wi-Fi enabled handsets to a general, consumer audience.

In simple terms, a Wi-Fi enabled handset allows the user to connect to data and voice services using a wireless internet signal - usually from an internet 'hotspot' connected to a local or national internet service provider, rather than using the normal cellular network provided by major phone companies. 

7) Why or why not Wi-Fi is something the consumer audience should care about and what Wi-Fi can be used for:   Although calls can use Wi-Fi I think the overwhelming uses will be internet surfing, and since the handset will be optimized for cellular signals the advantages of the Wi-Fi browsing will be diminished.  That said, I think there are advantages for users who use the phone often to browse and do not already have high speed services for the phone.

Relevant links: 

New York Times Article

ABI Market Research

Let's face it, your mobile operator doesn't provide service everywhere. They may claim nationwide coverage, and for the most part, they may be right. However, there are always going to be dead spots.

The thought of WiFi on your mobile handset might sound like a good thing. WiFi can often fill in some of those dead spots, for instance, inside your house. But it won't help you unless you use your mobile phone's data services extensively.

There is one exception to this rule. T-Mobile in the US offers their T-Mobile HotSpot @Home service which permits your mobile phone to use WiFi for making and receiving calls to your normal T-Mobile handset. T-Mobile uses a technology called UMA, short for unlicensed mobile access. This technology allows a mobile handset to seamlessly roam between a WiFi network and the standard mobile phone network.

However, this service will not allow you to use any old WiFi-enabled handset. Specific ones sold by T-Mobile can be used with this service--ones that contain the necessary UMA software. Other phones that are WiFi-enabled, such as many of Nokia's Nseries and Eseries devices, cannot utilize the UMA-specific features.

There are services that do permit you to call using the WiFi on your handset. The more well-known of these services, such as Gizmo Project, Truphone, and Fring, only run on high-end Nokia Nseries and Eseries handsets. These services do not offer seamless roaming between WiFi and the traditional mobile phone network, but they can be useful as a way to make cheap or even free calls from your mobile phone.

The biggest downside to WiFi on a mobile handset: the impact battery life. Extensive use of WiFi on a mobile handset can cut the runtime of a mobile phone substantially. If the WiFi is only used occasionally, it will not be as big of an impact.

For most normal people who do not utilize the Internet from their mobile handset or don't use something like T-Mobile's HotSpot @Home, WiFi is not necessary. Heavy data users or those who want to make cheaper phone calls may wish to consider a WiFi-enabled mobile handset.