On June 27th, T-Mobile announced the availability of its T-Mobile@Home service. Two days later the Apple iPhone (News - Alert) went on sale. David Pogue of the New York Times wrote that the T-Mobile announcement may turn out to be the more revolutionary one. This was hyperbole, to be matched against the irony-free judgment of one of my colleagues on trying out his new iPhone, that the iPhone has been under-hyped.

 

The phone I selected from T-Mobile was the Nokia (News - Alert) 6086. The 6086 and the iPhone are both GSM phones with WiFi (News - Alert) radios. The similarities end there. These two phones and their associated services are opposite in just about every way. The 6086 is a flip-phone, the iPhone a candy bar; the 6086 is a low-end feature phone, the iPhone runs a PC operating system and has a large high-resolution touch screen; the 6086 costs $50 with the service rebate, the iPhone costs $600, and Apple is rumored to get the rebate. But the most telling difference between them is the WiFi. The WiFi on the 6086 is for voice only. On the iPhone it’s for data only.

 

Why this difference in the use of WiFi? It’s not for technical reasons, so it must be driven by the business motivations of service providers and phone manufacturers. These two phones are a perfect illustration of how WiFi in cell phones is actually two distinct features that happen to be based on the same radio technology. The first of these features is FMC (Fixed Mobile Convergence) voice, which uses the Internet to deliver cellular voice service to dual-mode phones via WiFi access points. This benefits the service provider by providing network offload at a relatively low cost, and benefits the user by providing better coverage in residential areas. But if the WiFi could be used for data, it would potentially reduce the subscribers’ expenditures on mobile data plans.

 

The WiFi in the iPhone is a completely different animal. It’s on the phone for the same reason that cell phones over the years have acquired cameras, Bluetooth and other features. Phone makers are constantly seeking cool new must-have features to drive handset refresh. These features are added to high-end phones by the phone manufacturers against the preferences of the service providers, who would lose no sleep if their customers never bought a new phone. For high-end smart-phones, WiFi is a new checklist feature, without which the phone would be lame. In these high-end phones, the WiFi delivers a radically better Internet experience; depending on the device it can render a data plan un-needed. AT&T (News - Alert) gets around this issue with the iPhone simply by refusing to activate it without a data plan, even if the purchaser has no desire to use AT&T’s data network. But AT&T doesn’t yet have a FMC capability, and if the WiFi could be used for non-FMC voice it would potentially reduce the subscribers’ expenditures on voice minutes.

 

Recognizing these two completely distinct types of WiFi in cell phones helps to cast light on the femtocell versus WiFi issue. Femtocells compete with WiFi for FMC voice, but femtocell technology will have no impact on feature inflation in high end phones. So if femtocell technology is a total success, the worst case for WiFi in cell phones is that in a few years hundreds of millions of WiFi chips per year will ship in smartphones, but WiFi will absent from all the other types of handset.