Dual Mode Cell Phones and the Carriers

The defining difference between smartphones and other cell phones is an open operating system hospitable to third party applications.

There are some grey areas here, since some smartphones don’t let you load any old application you like, and since you can run third-party Java applications on nonsmartphones. But basically phones that run iPhone (News - Alert) OS, Windows Mobile, Symbian, Blackberry OS, Palm OS or Linux are considered smart phones. The smartphone market is growing far faster than the overall mobile phone market, going from 11 percent of all phones in 2007 to 25 percent in 2012.

Analysts’ consensus is that WiFi (News - Alert) is becoming mandatory on smartphones. Like open operating systems, the issue of WiFi in phones is an aspect of the larger questions of opening networks and devices, edging away from walled garden strategies. The iPhone and the Google G1 phone both have WiFi, as do almost all of Nokia (News - Alert)’s smartphones.

Last November’s crop of pretenders to the iPhone throne from RIM and HTC revealed that while AT&T and T-Mobile are warming to WiFi, Verizon (News - Alert) is ambivalent. Verizon’s HTC Touch Pro and two new Samsung phones have WiFi, but the Blackberry Storm, Verizon’s flagship smartphone, does not. None of Verizon’s or Sprint (News - Alert)’s Blackberries has WiFi.

From the users’ point of view, WiFi is an unalloyed good thing. It gives much faster data service than any cellular network, and the traffic doesn’t count towards data usage charges. From the carriers’ point of view there are pros and cons to WiFi. Pros: it can be used to improve residential coverage and offload the cellular network; T-Mobile (News - Alert) uses it this way with its @Home voice service. Cons: it enables customers to bypass the cellular network for their data traffic, potentially eating into revenues.

AT&T got around this issue with the iPhone by requiring a data subscription with each iPhone activation. Verizon has taken this a step further, binding all its smartphones to data plans.

If the Blackberry Storm ends up being a big hit, other carriers may take notice and cool towards WiFi, arguing that it is redundant now that high speed 3G data networks are widely deployed. If this happens, predictions of ubiquitous WiFi in smart phones may turn out to have been wrong. IT

Michael Stanford (News - Alert) has been an entrepreneur and strategist in VoIP for over a decade. Visit his blog at www.wirevolution.com.

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